The graph below shows what happens when the Fed implements:
A. quantitative easing.
B. precommitment policies.
C. operation twist.
D. credit easing.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firm benefit from advertising that it will match the lowest price offered by its competitor?
A) The advertisement is meant to suggest to consumers that the offered price is actually the lowest price available. B) The offer to match prices is a way of signaling to antitrust authorities that the firms are not engaged in illegal collusion. C) The advertisement ensures that the other firm does not cheat. If a firm cheats on the agreement and charges the lower price, the rival firm will retaliate by doing the same. D) The offer to match prices is a way of deterring entry by other large firms, thereby keeping the market share of the existing firms intact.
Which of the following statements is correct?
A. From the bank’s point of view, loans to customers are assets of the bank. B. From the bank’s point of view, loans to customers are liabilities of the bank. C. From the customer’s point of view, loans to customers are assets of the customer. D. From the customer’s point of view, loans to customers are liabilities of the customer. E. a and b only F. a and d only
Ceteris paribus, when market interest rates ________, ________ investment projects are undertaken.
A. decrease; less B. increase; more C. decrease; more D. increase; no