Author Question: In a game, a Nash equilibrium is reached only if the players: A) understand the game and the ... (Read 859 times)

sarasara

  • Hero Member
  • *****
  • Posts: 521
In a game, a Nash equilibrium is reached only if the players:
 
  A) understand the game and the payoffs associated with each strategy.
  B) follow a mixed strategy.
  C) use backward induction method to develop their strategies.
  D) have no best response for the choices made by other players.

Question 2

How does an increase in the price level affect the aggregate quantity of goods and services demanded?
 
  What will be an ideal response?



Beatricemm

  • Sr. Member
  • ****
  • Posts: 323
Answer to Question 1

A

Answer to Question 2

An increase in the price level decreases the aggregate quantity of goods and services demanded for three reasons. First, it decreases the buying power of money. As a result, people decrease their demand for goods and services. Second, it raises the real interest rate. The real interest rate rises because an increase in the price level increases the demand for money, which raises the nominal interest rate, which, in the short run, raises the real interest rate. When the real interest rate rises, people and businesses delay plans for investment and purchases of big-ticket items. Finally, an increase in the price level makes domestically produced goods and services more expensive relative to foreign-produced goods and services. As a result, people and firms buy more foreign produced and fewer domestically produced goods and services, which decreases the quantity demanded of domestically produced goods and services.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

There are approximately 3 million unintended pregnancies in the United States each year.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Did you know?

Medication errors are three times higher among children and infants than with adults.

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

For a complete list of videos, visit our video library