The Phillips curve is built on the assumption that business fluctuations are
A. from the demand side.
B. from the supply side.
C. from both the demand and supply side.
D. purely random events.
Answer: A
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By making exchange ________, money allows for specialization and higher ________
A) more difficult; costs B) more difficult; productivity C) easier; costs D) easier; productivity
According to the Incentive Principle:
A. people tend to do more of something when its benefits are greater. B. people will always take the highest-paying job they are offered. C. benefits are more important than costs in making a decision. D. it is irrational to perform volunteer services.
The Fed buys $1 million in bonds from a bond dealer. The bond dealer's bank experiences
A. an increase in assets of $1 million as its reserves increase and a decrease in liabilities as its transactions deposits fall. B. a decrease in assets of $1 million as the checking account of the bond dealer increased, and a decrease in liabilities as the bank's deposits with the Fed increased by $1 million. C. an increase in assets of $1 million as its reserves increase and an increase in liabilities of $1 million as the deposits in the bond dealer's transactions account increases by $1 million. D. no change in assets or liabilities. Assets both increased and decreased by the amount of the check.
Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game and the firms cooperate to maximize profits, which of the following outcomes would we expect to occur?
A. In repeated playing, the outcomes would alternate between cells A and D.
B. In repeated playing, the outcomes would alternate between cells B and C.
C. The two firms will agree to keep their advertising budgets small over time.
D. The game will reach a Nash equilibrium at cell A.