Consider Figure 12.5. The "dilemma" in the prisoners' dilemma is that:
A. one of the players cannot get to the best outcome.
B. both players would be better off by not confessing, but confessing is a dominant strategy.
C. both players would be better off by confessing, but not confessing is a dominant strategy.
D. the player with first-mover advantage always gets the better outcome.
Answer: B
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If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of deposits would be (assume that citizens prefer to keep 10% of their money as cash)
A) 100/0.25 times 1.1 which is 440. B) 100/0.35 which is approximately 286. C) 100/0.35 times 1.1 which is approximately 314. D) 100/0.10 which is 1000.
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 400 and WR = 100 and the probability of drought is 0.75. Brandon's risk premium is:
A. 250 units of water. B. 325 units of water. C. 17.5 units of water. D. 18.75 units of water.
Money is
A) an object that is directly consumed. B) widely used in a barter economy. C) whatever is generally used to pay for goods, services and resources. D) something that can be used to buy things but cannot be saved.
The economy moves up a stationary aggregate demand curve when the Fed:
A. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function. B. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. C. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. D. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function.