In a cartel, how does the number of firms affect the likelihood that the cartel will be able to successfully maintain a high price?
What will be an ideal response?
The more firms that are involved in the cartel, the lower the likelihood that the cartel will be able to maintain a high price. Essentially, the larger the number of firms, the greater the probability that someone will cheat!
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A 10 percent increase in income has caused a 5 percent decrease in the quantity demanded. The income elasticity is
A) 0.5. B) -0.5. C) 2.0. D) -2.0.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions become more positive (or less negative). c. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive). d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.