Suppose a firm that sells a variety of athletic shoes is trying to start a pattern of price leadership in its market. Which of the following is not a problem this firm might have to face?
a. Rivals recognize the intent of its actions.
b. Other firms may not necessarily follow the leader.
c. Other firms may not follow the leader but offer better service instead.
d. Differentiation among products allows for more variation in price.
e. The price leader must keep costs lower than other firms'.
E
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A contractionary fiscal policy
I. decreases a government budget deficit or increases a government budget surplus. II. includes tax cuts. III. may include discretionary cuts in transfer payments. A) I, II, and III B) I and II only C) I and III only D) II and III only
If a bank purchases government securities rather than lends funds, the:
a. M2 money supply does not rise. b. M2 money supply rises, but not by as much as when the funds are lent. c. M2 money supply rises by more than would be the case if the funds were lent. d. M2 money supply rises by the same amount as if they were lent.