It has been observed that whenever one imported beer distributor raises its price, other imported beer distributors quickly raise their price as well. Such behavior is characteristic of:
A) the barometric-firm model of price leadership.
B) explicit collusion.
C) price leadership.
D) the kinked-demand curve model of oligopoly.
C
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Suppose acre A is located at the market with zero transport costs of bringing its radishes to market. It costs acre B, located 20 miles away, $500 to transport its radishes to market. If demand for radishes is large enough so that both acres will be used to produce radishes,
a. the owner of acre A will earn zero location rent b. the owner of acre B will earn location rent of $500 c. the owners of acres A and B will earn combined location rents of $1,000 d. as long as one acre is located at the market, neither landowner of acre A nor B will earn location rent e. the owner of acre A will earn a location rent of $500
Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.8 and the reserve requirement is 0.1. If the Federal Reserve needs to decrease aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 5%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. buy, $4 billion B. sell, $4 billion C. sell, $2 billion D. buy, $2 billion
When the Fed adopts an expansionary monetary policy, _____
Fill in the blank(s) with the appropriate word(s).