Why might economic policies aimed at stabilization actually increase the magnitudes of economic fluctuations?
What will be an ideal response?
Well-timed economic policies can reduce the magnitudes of economic fluctuations. But if the policies are poorly timed, they might work in the opposite direction of the desired outcome. The poor timing can come from lags in implementation, for instance, delay between the time that the policies are implemented and the time they take effect.
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Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $60, the game is a
A) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
In the above figure, if initial equilibrium is at point A and if there is an unanticipated increase in aggregate demand from AD1 to AD2, then
A) in the short run real output will remain at Y1. B) in the short run real output will increase above Y1, but in the long run it will return to Y1. C) in the long run real output will increase above Y1. D) real output will increase above Y1 in both the short run and in the long run.