A Nash equilibrium ______
A. is the outcome that delivers maximum economic profit
B. is the outcome in which each player takes the best action given the other player's action
C. changes each time the game is played
D. is the best possible outcome for the two players
B Answer B is the definition of a Nash equilibrium.
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The Fed buys securities and gives the bank a check for the amount. After the check has cleared,
A) reserves remain unchanged because the increase of reserves at the bank are offset by an increase in reserves at the Fed. B) reserves have decreased by the amount of the check because the Fed pays for the check by decreasing the bank's deposits at the Fed. C) reserves have increased by the amount of the check because the Fed pays for the check by increasing the amount of the bank's deposits with the Fed. D) reserves have increased by the amount of the reserves multiplied by the required reserve ratio, and the quantity of money increases by the difference between the amount of the check and the increase in the reserves.
The aggregate supply curve represents levels of output that producers are willing to sell at
A) each level of the real interest rate. B) each level of real GDP. C) each price level. D) each inflation rate.