Predatory pricing is a strategy:
A. whereby a firm temporarily prices below its marginal cost to drive competitors out of the market.
B. whereby a firm enjoys lower costs due to knowledge gained from its past production decisions.
C. whereby an incumbent maintains a price below the monopoly level to prevent entry by potential competitors.
D. used by a vertically integrated firm to squeeze the margins of its competitors.
Answer: A
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When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier because
A) the price level rises B) the price level falls. C) real GDP increases. D) real GDP decreases.
A sign that the Federal Reserve is moving to lower interest rates would be
A) a reduction in bank reserves. B) an increase in margin requirements. C) a widening gap between the Treasury bill yield and the discount rate. D) a narrowing gap between the Treasury bill yield and the discount rate.
Which of the following is an example of money serving as a medium of exchange?
a. Richard puts money into a piggy bank. b. Ellen deposits cash into a money market account. c. Sean puts a new $20 bill into his currency collection. d. Marian buys a carbo-loaded drink before a marathon.
According to the permanent income hypothesis, households will tend to react to a temporary tax cut by
A. assuming the new tax level will be permanent. B. saving most of the additional disposable income. C. increasing consumption sharply in response to the higher disposable income. D. temporarily increasing their marginal propensity to consume.