Author Question: In a game, a Nash equilibrium is reached only if the players: A) understand the game and the ... (Read 976 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?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

Sperm cells are so tiny that 400 to 500 million (400,000,000–500,000,000) of them fit onto 1 tsp.

Did you know?

Coca-Cola originally used coca leaves and caffeine from the African kola nut. It was advertised as a therapeutic agent and "pickerupper." Eventually, its formulation was changed, and the coca leaves were removed because of the effects of regulation on cocaine-related products.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

For a complete list of videos, visit our video library