When a game has multiple equilibria, a useful method to sort out which one would be the "best" prediction is to
a. find the one (if any) in which both players are better off than in any other equilibrium.
b. find the equilibrium that is symmetric, if any.
c. find the one which seems "focal", if any.
d. all of the above.
d
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If the economy is growing 3% a year and the government increases the ratio of interest on the national debt to GDP, we may conclude that
A) the output ratio will fall. B) additional interest payments exceed 3% of GDP. C) tax revenues will fall. D) the Laffer curve will be inoperable.
Why is it impossible to make everyone better off in the long run by imposing import restrictions?
What will be an ideal response?
"As output of one good expands, the opportunity cost of producing additional units of this good increases," is the law of _____________.
Fill in the blank(s) with the appropriate word(s).
After Joyce and Larry purchased their first house, they made additional home improvements in response to increases in income. After a while, their income rose so much that they could afford a larger home. Once they realized they would be moving, they reduced the amount of home improvements. Their Engel curve for home improvements on their current home is
A) negatively sloped. B) flat. C) positively sloped. D) backward bending.