Two suspected drug dealers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of marijuana and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison. If you both
confess, you will each get 5 years." If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana. If each suspected drug dealer follows a dominant strategy, what should he/she do?
a. Confess regardless of the partner's decision
b. Confess only if the partner confesses
c. Don't confess regardless of the partner's decision
d. Don't confess only if the partner doesn't confess
a
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Which of the following terms refers to an unusually severe, prolonged recession, typically with an unemployment rate that exceeds 20%?
A) Depreciation B) Deflation C) Inflation D) Depression
Critics of real business cycle theory doubt the plausibility of ________
A) intertemporal substitution B) negative productivity shocks C) adaptive expectations D) a trade-off between work and leisure
An information product is a product for which
A) the first item is produced inexpensively but additional units are more costly to produce. B) the first unit is very costly to make but additional units are less costly to produce. C) the marginal cost first falls and then rises but the average total cost rises throughout its range. D) the average fixed cost first falls and then rises, but the average total cost falls throughout its range.
Which one of the following will shift the consumption function upward?
a. Higher interest rates. b. Expectations that the economy will grow in the future. c. A decrease in money holdings. d. Higher capacity utilization rates. e. A tax increase.