Although there are many examples of game theory in the real world, how well do you think specifics like payoff matrices, Nash equilibrium, and dominant strategies translate to reality?
What will be an ideal response?
It is difficult to assess the relevance of game theory to real-world problems. We may not always know the payoffs facing players in the game. In real-world situations, the payoffs are determined by the attitudes and feelings of individuals as well as by their monetary returns; emotional payoffs are difficult to observe. Even with dominant strategies, the same problem exists. Game theory often abstracts from important details. For example, in many strategic environments one player may be more cunning, wiser, or more experienced than another.
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When the Fed lowers the federal funds rate, which of the following economic variables responds most slowly?
A) other short-term interest rates B) the inflation rate C) consumption expenditure D) the long-term real interest rate E) the supply of loanable funds
Saving is S, investment is I, net taxes is NT, government expenditure is G, exports is X, and imports is M. Using these symbols, what is the relationship among the saving, investment, net taxes, government expenditure, exports, and imports?
What will be an ideal response?
The Koyck distributed lag model is an example of:
A. a moving average model. B. an autoregressive conditional heteroskedasticity model. C. an infinite distributed lag model. D. a finite distributed lag model.
If a firm needs one machine to produce a product, and must replace the machine when it wears out, then the firm should pick a durability level of the machine that
A) minimizes the expense today. B) minimizes the present discounted cost of having the machine forever. C) maximizes the future value of the machine. D) minimizes the future value of the machine.