An illustration of a non-credible commitment is the promise
a. to not increase capacity in a declining industry
b. to match a new entrant's discount price
c. to enter a profitable industry
d. to restrain output to the quota assigned by a cartel
e. to exit in the face of projected losses.
d
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The Latin term "ceteris paribus" means
A) "obviously true." B) "what is true of the whole is not necessarily true of the parts." C) "false unless proven true." D) "other things remaining the same." E) "after this, therefore because of this."
Answer the following questions true (T) or false (F)
1. Inflation usually increases during a recession and decreases during an expansion. 2. The process a firm uses to turn inputs into outputs of goods and services is called technology. 3. If a firm experiences positive technological change, it is able to produce more output using the same inputs.
Which of the following is a reason to study economics?
A. Economic analysis explains daily events. B. It helps us understand why people, firms and government behave in a certain way. C. We need to understand relevant economic applications and policy issues. D. It provides useful logic for solving complex problems. E. All of these
What impact would the Fed's raising the interest rate have on any inflationary pressure in the economy?
A) An increase in interest rates decreases the money demand, which could slow increases in the price level. B) An increase in interest rates decreases the exchange rate, which causes net exports to rise, generating inflation. C) An increase in interest rates increases real GDP, which creates inflation in an economy. D) An increase in interest rates increases the money supply, which could cause the price level to increase.