In a majority-rules democracy, economic thinking suggests that we should expect to see institutions and policies that
a. are short-sighted.
b. take the long view, sacrificing current benefits to get larger future benefits.
c. benefit the common citizen at the expense of narrow special interest groups which, after all, have fewer voters.
d. are biased against income transfer programs, regardless of constitutional limits.
A
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Define the term Nash equilibrium. In general, what can be claimed about the existence, uniqueness, and Pareto optimality of Nash equilibria? Support your answers with appropriate examples.
What will be an ideal response?
During the German hyperinflation of the 1920s, the large increases in the money supply were generated by the German government
A) significantly raising the required reserve ratio to reduce business loans. B) significantly lowering the required reserve ratio to enable German businesses to obtain loans. C) selling large quantities of government bonds to the central bank, the Reichsbank. D) printing large quantities of German marks.
Governments have often intervened in financial markets because they believed that
a. interest rates were too low b. competition among banks leads to poor services c. bank lending was favoring lucrative projects at the expense of crucial development needs d. too much foreign money was entering their financial systems e. all of the above
When the absolute price elasticity of demand is greater than 1, demand is
A) elastic. B) unit-elastic. C) inelastic. D) undetermined without more information.