Author Question: How do we arrive at a Nash equilibrium in a matrix game? What will be an ideal ... (Read 48 times)

burton19126

  • Hero Member
  • *****
  • Posts: 532
How do we arrive at a Nash equilibrium in a matrix game?
 
  What will be an ideal response?

Question 2

When the aggregate supply curve intersects the aggregate demand curve at a level of real GDP that exceeds potential GDP, is there an inflationary gap or a deflationary gap? What adjustments will take place?
 
  What will be an ideal response?



mcabuhat

  • Sr. Member
  • ****
  • Posts: 344
Answer to Question 1

The key to finding Nash equilibrium in a matrix game is to follow the logic of finding best responses. Once the best response of each player to the strategies of the other player is determined, we need to check if either player has an incentive to change his or her strategy. If each player follows his best responses to the strategies of other players, none of them will have an incentive to change their strategies and thus Nash equilibrium will be reached.

Answer to Question 2

There is an inflationary gap because real GDP exceeds potential GDP. In this situation, the money wage rate will rise, shifting the aggregate supply curve leftward and raising the price level. Eventually the economy will return to potential GDP. At this time, real GDP is lower than when the inflationary gap existed but the price level is higher.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

As many as 20% of Americans have been infected by the fungus known as Histoplasmosis. While most people are asymptomatic or only have slight symptoms, infection can progress to a rapid and potentially fatal superinfection.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

The familiar sounds of your heart are made by the heart's valves as they open and close.

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

For a complete list of videos, visit our video library