A central bank can sterilize the increase in the money supply that results from an intervention to defend a fixed exchange rate by selling domestic government bonds.

An export subsidy differs from a tariff in each of the following ways EXCEPT

A) a tariff generates revenue. B) a tariff is applied to imports. C) a tariff results in an efficiency loss. D) a tariff is a tax. E) a tariff discourages imports.

The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. If the fixed cost of entry were to increase, which of the following would occur?

A) The incumbent chooses the Cournot level of output. B) The incumbent shuts down. C) The entry-deterring level of output rises. D) The entry-deterring level of output falls.