The prisoners' dilemma is used to illustrate the basic idea that
a. oligopolistic firms would be better off if they collude, but each has an incentive to cheat on the collusive agreement.
b. oligopolistic firms are always worse off when they collude.
c. oligopolistic firms never have an incentive to cheat on collusive agreements, unlike prisoners.
d. students who cheat on economics exams end up in jail.
A
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Keynes argued that when interest rates were low relative to some normal value, people would expect bond prices to ________ so the quantity of money demanded would ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
The ________ of the 1968 tax surcharge led to the prominence of the developer of the permanent-income hypothesis that predicted it, ________
A) success, Walter Heller B) success, Milton Friedman C) failure, Walter Heller D) failure, Milton Friedman
One result of a contractionary monetary policy would be
A) a decline in the price level. B) an increase in the money supply. C) an increase in business investment. D) lower interest rates.
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.