Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game with no cooperation or reciprocity, cell A:
A. is not the expected outcome of this game.
B. is the expected outcome of this game, and it is both a Nash equilibrium and a prisoner's dilemma.
C. is the expected outcome of this game, but it is neither a Nash equilibrium nor a prisoner's
dilemma.
D. is the expected outcome of this game, and it is a Nash equilibrium but not a prisoner's
dilemma.
B. is the expected outcome of this game, and it is both a Nash equilibrium and a prisoner's dilemma.
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If the expected future inflation rate decreases, then
A) aggregate demand increases. B) short-run aggregate supply increases. C) aggregate demand decreases. D) long-run aggregate supply decreases.
With respect to reserve requirements on bank deposits, the Board of Governors can set them
A) at any level the Board desires. B) at any level approved by the Federal Open Market Committee. C) within the bounds of the specific limits imposed by Congress. D) within the bounds of the specific limits set by the Secretary of the Treasury.
Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?
Domestic currency appreciation will:
A) help domestic firms that export and hurt domestic firms that import. B) hurt domestic firms that import. C) hurt domestic firms that export and help domestic firms that import. D) help domestic firms that export.