Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. If two residents of Avarice play a prisoner's dilemma game, they are likely to:
A. reach the Nash equilibrium less often than would residents of Altruism.
B. play their dominated strategies more often than would residents of Altruism.
C. reach the Nash equilibrium more often than would residents of Altruism.
D. never reach the Nash equilibrium.
Answer: C
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Use the following figures to answer the next question.
A decline in aggregate expenditures from AE2 to AE1 resulting from the real-balances, interest-rate, and foreign purchases effects would be depicted as a ________.
A. shift of aggregate demand from AD2 to AD1 B. shift of aggregate demand from AD1 to AD2 C. movement from A to C along aggregate demand curve AD1 D. movement from C to A along aggregate demand curve AD1
Leaving a handsome tip for the waiter in full view of your dinner date is a
a. Screening mechanism b. Signaling mechanism c. Way to waste money d. None of the above
One difficulty of computing the value of GDP is that there are no market prices for
A. exports and imports. B. business investments. C. government goods and services. D. resource values.
Discuss some of the implications of rational expectations
What will be an ideal response?