The underlying reason why gasoline prices at neighboring stations are usually identical is that
A. these operators are usually friends and benefit from the other's presence.
B. collusion is prevalent in the energy sector.
C. because under oligopoly, it can be in each firms best interest to independently charge a price equal to their competition's price.
D. collusion is legal in the energy sector.
Answer: C
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If UIP holds, the foreign interest rate is 10%, and the home currency is expected to depreciate by 4%, then the home interest rate is:
a. 4% b. 6% c. 10% d. 14%
Which of the following is not considered to be an important determinant of investment?
A. Technological change. B. Expectations. C. Interest rates. D. Current disposable income.
Refer to the graph below. Stagflation in the short run is best represented as resulting from a shift of:
A. AD1 to AD2 given a stable AS1 curve
B. AD2 to AD1 given a stable AS1 curve
C. AS1 to AS2 given a stable AD1 curve
D. AS2 to AS1 given a stable AD1 curve
The market for bagels contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars) depends on whether they abide by the agreement or cheat on the agreement. 
For Bagels 'R' Us, ________ is a ________.
A. abiding by the agreement; dominant strategy B. cheating on the agreement; dominant strategy C. cheating on the agreement; dominated strategy D. abiding by the agreement; dominant strategy when Bagel World also abides