Game theory shows that
A) sometimes pursuing profit maximization will not yield the highest joint profit.
B) interdependencies between firms have to be taken into account when few firms dominate the market.
C) in an oligopolistic market, firms are likely to collude.
D) All of the above.
D
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Who is an unemployed worker? If the number of employed workers in a country, where the size of the labor force is 4 million, is 2.75 million, what is the number of unemployed workers in the country?
What will be an ideal response?
If the Fed engages in quantitative easing, it has likely
A) started paying interest on required reserves. B) increased the federal funds rate by selling private securities. C) increased the discount rate to prevent inflation. D) decreased the discount rate by selling its own securities. E) decreased the federal funds rate to almost zero by buying large sums of securities.
Under fiscal stabilization policy in the New Keynesian model, after a positive shock to output,
A) the government increases expenditures and the central bank increases the money supply. B) the government increases expenditures and the central bank decreases the money supply. C) the government decreases expenditures and the central bank increases the money supply. D) the government decreases expenditures and the central bank decreases the money supply.
In the labor market, contracts are often designed to include a variable salary component that is tied to some measure of performance. Why?
A. Labor unions demand a variable salary component. B. The variable component reduces wages paid by firms. C. Such contracts provide workers with the incentive to work hard. D. Most people are risk-loving and thus variability in their compensation leads to higher total utility.