When businesses cooperate and agree to hold prices high, it is called ________, and when they reach a noncooperative equilibrium it is called ________.
A. commitment strategy; collusion
B. collusion; commitment strategy
C. collusion; competition
D. competition; collusion
Answer: C
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To maintain a fixed exchange rate, when the exchange rate moves above the target level, the central bank must
a. sell foreign currency from reserves. b. buy foreign currency. c. raise taxes. d. raise government spending. e. pass a law that increases the exchange rate.
If a firm shuts down in the short run and produces no output, its total cost will be
a. zero b. equal to total variable cost c. equal to total fixed cost d. equal to explicit costs only e. impossible to calculate
The budget of an unconstrained government is similar to a common pool resource, and this will lead to
A) lower interest rates and spending levels consistent with economic efficiency. B) excessive spending and budget deficits. C) lower taxes and a deficient level of spending. D) a deficient level of spending and budget surpluses.
Which of the following is the environmental approach found in the Clean Air Act of 1990?
A. Marketable pollution permits. B. Price caps. C. Command-and-control regulation. D. EPA marginal social permits.