Suppose there are two firms maintaining a cartel agreement. If one firm suddenly drops its price, the other firm could interpret this as signaling:
A. underpricing.
B. limit pricing.
C. cartel pricing.
D. cooperative pricing.
Answer: A
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In the above figure, the axis break in the x-axis
A) reflects the fact that for the years covered in the figure, the unemployment rate was never less than 3 percent. B) shows that there is no relationship between inflation and unemployment. C) misleadingly shows that inflation has changed very little even though the unemployment rate has increased a great deal. D) implies that for the years covered in the figure, the inflation rate was always greater than 1 percent.
The growth of the Eurodollar market is due to the ________ spreads offered by ________
A) narrower, Eurobanks B) narrower, governments C) narrower, domestic banks D) Both A and B
The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment. He argues that if the Fed increased the money supply faster, more workers would find jobs. The Senator's argument
a. is completely correct. b. is completely wrong. c. is true for the short run but not the long run. d. is true for the long run but not the short run.
Suppose the perfectly competitive equilibrium occurs such that too many units of the good are produced. This is an example of
A. greedy business people behaving in an inappropriate manner. B. firms have not yet exited the industry. C. marginal cost pricing. D. market failure.