Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch.
If before Tracy chose, Amy could make a credible commitment to choose either the top or bottom branch when her turn came, then Amy would commit to the ________ branch and Tracy would choose the ________ branch.
A. bottom; top
B. top; bottom
C. top; top
D. bottom; bottom
Answer: A
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In 1996, an advisory commission, appointed by the Senate Finance Committee, estimated that, due to certain distortions, the CPI overstates inflation by
a. .5 percentage points per year. b. 2.0 percentage points per year. c. 1.1 percentage points per year. d. .25 percentage points per year.
Compared to its position during the late 1970's, the Phillips curve for the U.S. economy in the 1980's appeared to
a. shift to the left. b. shift to the right. c. shift upward. d. remain unchanged.
Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. From the law of demand we know that ax will be:
A. greater than zero. B. less than zero. C. zero. D. none of the statements associated with this question are correct.
Suppose that the price elasticity of supply is 0.8 and the price increases by 10%. We would predict:
A. an 8% increase in quantity supplied. B. a 12.5% increase in quantity supplied. C. a 0.8% increase in quantity supplied. D. a 1.25% increase in quantity supplied.