What happens in a duopoly if both firms try to act as the Stackelberg leader?
What will be an ideal response?
If both firms think they are the leader, they will maximize profits subject to the other firm's response function. Each firm will produce twice what the other firm thinks it is producing. As a result, output and price are driven to the competitive equilibrium.
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If the asset market is in equilibrium, the growth rate of the nominal money supply minus the growth rate of real money demand equals
A) the real interest rate. B) the inflation rate. C) the price level. D) the growth rate of real output.
How can a bond investor hedge against a possible bear market in bonds?
A) sell futures contracts on Treasury notes B) buy futures contracts on Treasury notes C) going long in the spot market D) going short in the spot market