When Pepsi is considering a price hike, it needs to consider how Coke may react. This situation is called:
a. mutual interdependence.
b. price leadership.
c. collusion.
d. monopolistic competition.
a
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Which of the following is the best example of money used as a medium of exchange?
A. Prices of products in a store in Mexico are marked in terms of U.S. dollars. B. A farmer stores $100 dollar bills in a strong box under the floor in a barn. C. A plumber unclogs a drain for a carpenter, who repairs broken steps for the plumber. D. In a prisoner of war camp cigarettes are traded for socks, candy and/or food, even by nonsmokers.
Savers supply funds to those who want to borrow for their investment spending needs in the:
A. market for loanable funds. B. market for savings. C. market for interest rates. D. stock market.
Other fundamental things being equal, a decrease in the exchange rate value of domestic currency will cause the current account to
A. overshoot its long-run value. B. move toward a surplus. C. move toward a long-run deficit. D. equal the official settlements balance.
Which of the following would be a consequence of substitution bias in the CPI?
A) Social Security payments would not adequately compensate retired workers for inflation. B) Businesses would overcompensate employees for inflation when giving cost of living raises. C) The inflation rate based on the CPI would underestimate the true level of inflation. D) Judges would award child support payments that would not adequately keep up with the true cost of inflation.