What is the incentive for a firm to join a cartel?
A) to be able to earn profits in the long run but not in the short run
B) to be able to earn larger profits than if it was not part of the cartel
C) to completely insulate itself from competition
D) to produce a larger amount of output than if it was not part of the cartel
Answer: B
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A prediction of the Ricardo-Barro effect is
A) a larger decrease in the real interest rate when the government runs a budget surplus. B) no effect on the real interest rate when the government runs a budget deficit. C) a larger decrease in investment when the government runs a budget deficit. D) a larger increase in the real interest rate when the government runs a budget deficit. E) a larger decrease in investment when the government runs a budget surplus.
The open economy multiplier will increase if
A. the MPM increases. B. the MPC increases. C. the MPM decreases. D. either the MPM or the MPC increases.