"Because firms in an oligopoly are so large, they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is incorrect. Oligopoly is an industry in which only a few firms compete. Because there are only a few firms, the hallmark of oligopoly is mutual interdependence, that is, one firm's action will affect the other firms. The fact that in oligopoly each firm's actions affect its rivals is unlike the case in perfect competition or monopolistic competition, in which there are so many firms that one firm's actions have no effect on its rivals, or monopoly, in which there is only one firm and hence no rivals.
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Assuming that C + Ir + G < C + I + G, then
a. there is an unintended inventory accumulation. b. there is an unintended inventory shortfall. c. aggregate demand is less than output. d. Both b and c
If an economy were experiencing a high rate of unemployment as the result of insufficient aggregate demand, a Keynesian economist would favor:
A. a reduction in taxes coupled with a reduction in government expenditures of equal size. B. an increase in government expenditures coupled with an increase in taxes of equal size. C. a reduction in taxes, without any offsetting reduction in government expenditures. D. maintenance of a balanced budget.