Explain what guaranteed price matching means. What are the consequences of such a policy?
What will be an ideal response?
Guaranteed price matching occurs when a firm announces that it will match the price of any other firm who offers their product for a lower price. Although this might seem on the surface to benefit consumers by keeping prices low, in actuality it has the opposite effect. By using a guaranteed price matching strategy, a firm actually ensures that its competitors keep their prices high, which benefits the firms and hurts the consumers.
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If the Fed wishes to decrease the supply of money and credit, it may sell government securities, raise the discount rate, or lower required reserve ratios
Indicate whether the statement is true or false
A monopoly is characterized by all of the following except
A) the firm has market power. B) there are no close substitutes to the firm's product. C) there are only a few sellers, each selling a unique product. D) entry barriers are high.
Fluctuations in the target interest rate in the New Keynesian model lead to all of the following except
A) procyclical real wages. B) procyclical employment. C) countercyclical prices. D) procyclical consumption.
Farming in the New England colonies tended to be
(a) large scale. (b) worked by slaves. (c) small scale and worked by members of the family. (d) exported to England and its trading partners for high profits.