When players cannot achieve their goals because they are unable to make credible threats or promises, the situation is called a:
A. Nash equilibrium.
B. prisoner's dilemma.
C. failure of dominant strategies.
D. commitment problem.
Answer: D
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In a 2-good model, suppose that all individuals have tastes that are quasilinear in either good 1 or in good 2 (with some of each represented in the group.) The quasilinearity of everyone's tastes is then sufficient to insure that we can treat the group as if it were a single representative consumer.
Answer the following statement true (T) or false (F)
Aggregate demand in an economy with no government or foreign trade is
A) consumer expenditure plus actual investment. B) consumer expenditure plus planned investment. C) consumer expenditure plus inventory investment. D) consumer expenditure plus fixed investment.
State and local governments receive most of their revenue from
A) sales and excise taxes, revenue from the federal government, and property taxes. B) individual income taxes, social insurance contributions, and property taxes. C) corporate income taxes, property taxes, and personal income taxes. D) property taxes, sales and excise taxes, and Social Security contribution.
Why do free trade proponents applaud successful trade deflection?
A) It circumvents trade restrictions within regional trade blocs. B) It increases trade restrictions within regional trade blocs. C) It promotes more rules of origin laws. D) It decreases incentives for trade diversion.