When Oligopolistic Firms Interacting with One Another Each Choose Their

question 172

Multiple Choice

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, we have

• A)a cartel.
• B)a group of oligopolists behaving as a monopoly.
• C)a Nash equilibrium.
• D)the perfectly competitive outcome.

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Definitions:

Interest Rate Parity

A theory which posits that the disparity in interest rates across two nations is identical to the discrepancy between the forward exchange rate and the current spot exchange rate.

Exchange Rate Arbitrage

A strategy involving the simultaneous purchase and sale of a currency to exploit differences in its price in different markets, aiming for a risk-free profit.

Currency Swap

A financial agreement between two parties to exchange principal and/or interest payments of a loan in one currency for equivalent amounts in another currency.

Fixed Interval

A specified period of time between events or actions, used in scheduling and monitoring activities.