In the prisoner's dilemma setting for producing and stealing, a tax imposed on participants could end up changing the payoff matrix so that
A. one participant is better off, and one participant is worse off.
B. both participants are worse off.
C. both participants are better off.
D. all of the above are possible
Answer: D
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When all else is held constant, during recessions government
(a) revenues and expenditures increase. (b) revenues increase and expenditures decrease. (c) revenues decrease and expenditures rise. (d) revenues and expenditures decrease.
According to the classical system, a decrease in the income tax rate reduces the after-tax real wage
a. and shifts the labor supply schedule to the right. b. and shifts the labor supply schedule to the left. c. without shifting the labor supply schedule. d. None of the above
According to the Keynesian model, which of the following policies would be most appropriate during a period of rapid inflation?
a. a tax cut b. a budget deficit c. a budget surplus d. an increase in the money supply
Changes in which of the following variables will cause the current nominal exchange rate to change?
A) the future expected long-run nominal exchange rate, Eet+n B) future expected domestic nominal interest rates C) future expected foreign nominal interest rates D) all of the above