When one firm assumes others in the market will follow its price setting behavior, this is referred to as
a. the kinked demand model
b. the godfather model
c. oligopoly
d. the cartel model
e. monopolistic competition
B
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A open market purchase of government securities by the Fed will cause which of the following?
A) an increase in the equilibrium quantity of reserves B) a reduction in the federal funds rate C) an increase in the amount of excess reserves that banks will wish to hold D) all of the above
Everything else held constant, changes in the interest rate affect planned investment spending and hence the equilibrium level of output, but this change in investment spending
A) merely causes a movement along the IS curve and not a shift. B) is crowded out by higher taxes. C) is crowded out by higher government spending. D) is crowded out by lower consumer expenditures.
Why was OPEC unable to maintain high oil prices in the long run?
a. Demand and supply are both elastic in the long run compared to the short run. b. Demand and supply are both inelastic in the long run compared to the short run. c. Demand is elastic and supply is inelastic in the long run compared to the short run. d. Demand is inelastic and supply is elastic in the long run compared to the short run.
Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement
What will be an ideal response?