Answer the following statement(s) true (T) or false (F)
1. If either player is receiving his maximum payoff, then that outcome is Pareto optimal.
2. An outcome that is Pareto optimal is preferred by both players to all other possible outcomes.
3. A Nash equilibrium need not be Pareto optimal, and a Pareto-optimal outcome need not be a Nash equilibrium.
4. In the Prisoners' Dilemma game, the only outcome that is not Pareto optimal is also the game's only Nash equilibrium.
5. When a game is played sequentially, the first player will have an advantage over the second player.
1. True
2. False
3. True
4. True
5. False
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The exchange rate can be very volatile, yet the quantity of dollars traded might not change much because
A) the Fed is constantly intervening by buying and selling dollars. B) there is only limited quantity of dollars in the foreign exchange market. C) supply of dollars and the demand for dollars often change in opposite directions. D) supply of dollars and the demand for dollars often change in the same directions. E) both the demand curve for dollars and the supply curve of dollars are horizontal.
Suppose a bank repays a $10 million discount loan that it had previously borrowed from the Fed. Illustrate how this affects the balance sheets of the Fed and the banking system
What will be an ideal response?
A perfectly competitive firm is a “price maker.”
Answer the following statement true (T) or false (F)
Which of the following about unemployment is true?
a. When a dynamic labor market is operating efficiently, mostly cyclical unemployment will be present. b. Some unemployment will be present even when a dynamic labor market is operating efficiently. c. When full employment is present, the rate of unemployment will be zero. d. When full employment is present, there will not be any frictional unemployment. e. When full employment is present, it will be impossible to sustain the current rate of output in the future.