(Consider This) Suppose that a large tree on Betty's property is blocking Chuck's view of the lake below. Betty accepts Chuck's offer to pay Betty $100 for the right to cut down the tree. This situation describes:
A. the Coase theorem.
B. the optimal allocation of a public good.
C. nonrivalry and nonexcludability.
D. a market for externality rights.
Answer: A
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During normal times
A) fiscal policy is very effective because it the effects of fiscal policy will swamp automatic stabilizers and time lags can be. B) fiscal policy can immediately correct problems in the economy. C) the Ricardian equivalence theorem makes fiscal policy very effective. D) fiscal policy is not effective because of the recognition time lag.
The prisoner's dilemma:
A. can be summarized in a payoff matrix. B. can involve two players. C. leads to a less-than-ideal outcome for all players. D. All of these statements are true.
Which diagram in Figure 15.1 best represents the Keynesian view of investment demand when monetary policy is effective?
A. a. B. b. C. c. D. d.
Strategies and incentives:
A. work the same whether games are played once or repeated. B. often work quite differently when games are repeated. C. do not change when the game is repeated. D. None of these statements is true.