Refer to the scenario above. Which of the following is likely to be true if Joe is known to be trustworthy?
A) Multiple equilibria will occur.
B) A Nash equilibrium will occur.
C) A socially inefficient equilibrium will occur.
D) A dominant strategy equilibrium will occur.
B
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The Fed makes an open market operation purchase of $200,000. The currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. By how much does the quantity of money increase?
A) $800,000 B) $333,333 C) $2,000,000 D) $615,416 E) $465,116
The argument that econometric policy evaluation is likely to be misleading if policymakers assume stable economic relationships is known as
A) the monetarist revolution. B) the Lucas critique. C) public choice theory. D) new Keynesian theory.
If the entrepreneur is also the manager of the firm, we would expect
A) the manager to work hard because he or she is also the residual claimant. B) the manager to not work hard since there is no possibility of further advancement. C) the firm to operate poorly because the specialization of labor is not adequate. D) the firm to operate poorly because the entrepreneur is not as good at managing workers as a professional manager would be.
In 2008, the Fed responded to the financial crisis by:
A. offering nearly unlimited short-term financing to any bank that suddenly found itself short on cash. B. increasing the interest rates to encourage people to save, so banks would have more money on hand to lend. C. doing nothing, and allowing the automatic stabilizers to bring the economy back to its long run equilibrium. D. reducing money supply.