Suppose an oligopoly consists of two firms. Firm A lowers price and Firm B responds by lowering its price by the same amount. If average costs and industry output remain the same, which of the following will occur?
A) The profits of the two firms will increase.
B) The profits of the two firms will decrease.
C) The profits of the two firms will remain the same.
D) Barriers to entry will come tumbling down and new firms will enter.
B
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Currency traders expect the value of the dollar to rise. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
A) Demand for dollars will decrease, and supply of dollars will increase. B) Demand for dollars will decrease, and supply of dollars will decrease. C) Demand for dollars will increase, and supply of dollars will increase. D) Demand for dollars will increase, and supply of dollars will decrease.
The ability to quickly convert an asset into cash is
A) disintermediation. B) the standard of deferred payment. C) financial intermediation. D) liquidity.
If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,
a. the nation must be experiencing a net capital inflow. b. the nation must be experiencing a net capital outflow. c. the nation's inflation rate must increase. d. the nation's interest rate must increase.
From 1980 to 1987
a. foreigners were buying more assets from the United States than Americans were buying abroad. The United States was going into debt. b. Americans were buying more assets abroad than foreigners were buying from the United States. The United States was going into debt. c. foreigners were buying more assets from the United States than Americans were buying abroad. The United States was moving into surplus. d. Americans were buying more assets abroad than foreigners were buying from the United States. The United States was moving into surplus.