An Open Market Sale by the Fed Causes the Value

question 93

Multiple Choice

An open market sale by the Fed causes the value of the dollar to

• A) rise, increasing net exports.
• B) rise, reducing net exports.
• C) fall, increasing net exports.
• D) fall, reducing net exports.

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Definitions:

Price Leadership

An informal method that firms in an oligopoly may employ to set the price of their product: One firm (the leader) is the first to announce a change in price, and the other firms (the followers) soon announce identical or similar changes.

Kinked Demand

A market scenario where a firm's demand curve is more elastic for price increases than for price decreases due to competitive reactions.

Monopolistic Competition

A market structure in which many firms sell products that are similar but not identical, allowing for some degree of market power.

Oligopoly

A market structure characterized by a small number of firms that have significant control over market prices and competition levels.