Author Question: When both players in a zero-sum game play their ideal strategies, the expected payoff for each ... (Read 32 times)

Kthamas · **on:** Jun 29, 2018

When both players in a zero-sum game play their ideal strategies, the expected payoff for each player is zero.

Indicate whether the statement is true or false

Question 2

The table above gives the demand for loanable funds and private supply of loanable funds schedules.

a. What is the equilibrium real interest rate and quantity of loanable funds?
b. Suppose that the government has a budget surplus of 2.5 billion. If there is no Ricardo-Barro effect, what is the equilibrium real interest rate and quantity of loanable funds?

olderstudent · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

TRUE

Answer to Question 2

a. The equilibrium real interest rate is 8 percent and the quantity of loanable funds is 11.0 billion.
b. Add 2.5 billion to each quantity of the supply of loanable funds schedule. The equilibrium real interest rate becomes 6 percent and the equilibrium quantity of loanable funds increases to 12.5 billion.