Refer to the normal-form game of price competition shown below.Firm AFirm B??CD?A50,50500-x,200?B100,500-x50,50For what values of x is strategy D strictly dominant for firm B?
A. x = 450
B. All x > 450
C. All x < 450
D. x < 50
Answer: B
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Which of the following was an argument for using fiscal policy in situations like the Great Recession?
a. Congress can act quickly. b. The size of a recessionary gap may require the use of both fiscal and monetary policy. c. Once the federal funds rate is reduced to zero, monetary policy is less effective. d. all of the above
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. constant returns to scale because average total cost is constant as output rises. c. diseconomies of scale because average total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.
When the interest rate decreases, the opportunity cost of holding money
a. increases, so the quantity of money demanded increases. b. increases, so the quantity of money demanded decreases. c. decreases, so the quantity of money demanded increases. d. decreases, so the quantity of money demanded decreases.
The period of declining growth in real GDP between the peak of the business cycle and the trough is called a(n):
A. recessionary phase. B. expansionary. C. recovery phase. D. stationary phase.