-Refer to the Payoff Matrix Above

question 68

Multiple Choice

-Refer to the payoff matrix above. Which of the following is the dominant strategy equilibrium?

• A)Set High Price/Set High Price
• B)Set Low Price/Set Low Price
• C)Set High Price/Set Low Price
• D)Set Low Price/Set High Price

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Definitions:

Central Banks

National banks that provide financial and banking services for a country's government and commercial banking system, mainly responsible for monetary policy.

Fixed Exchange Rate

A rate of exchange that is set in some way and therefore prevented from rising or falling with changes in currency supply and demand.

FX Reserves

Foreign exchange reserves, assets held on reserve by a central bank in foreign currencies, used to back liabilities on their own issued currency as well as to influence monetary policy.

Foreign Investment

The investment of capital by individuals, firms, or governments in business interests located in another country.