This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure shown, Sarah:
A. should put forth low effort, regardless of what Joe chooses to do.
B. should take the first-mover advantage and put forth low effort.
C. should put forth high effort, regardless of what Joe choose to do.
D. does not have a dominant strategy.
Answer: A
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen asĀ
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
The purpose of collateral and restrictive covenants is to reduce ________ in debt contracts
A) adverse selection B) transactions costs C) moral hazard D) loan amounts
If total deposits at Last Bank and Trust are $100 million, total loans are $70 million, and excess reserves are $20 million, then which of the following is the required reserve ratio?
a. 70 percent. b. 30 percent. c. 20 percent. d. 10 percent.
Most of the dollars that foreigners have obtained because of our huge current account deficit
A. circulates in foreign countries. B. are used as reserves. C. are invested in the United States. D. are used to pay off old debts to the United States.