Collusive agreements between two firms are most likely to be honored when the game:

A. is a one-time game with the opportunity for a prisoner's dilemma.
B. has a Nash equilibrium that differs from the outcome that maximizes the payoffs to the two
firms.
C. is a zero-sum game.
D. is repeated and both firms offer credible threats if the other violates the agreement.


Answer: D

Economics

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Given the following formula for the Taylor rule:Target federal funds rate = natural rate of interest + current inflation + 1/2(inflation gap) +1/2(output gap) If the inflation rate in the economy were to fall by 2% below the target inflation rate, the target federal funds rate would:

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