Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game, it is in the long-term best interests of both players to:
A. compete, attempting to maximize their own payoffs each time the game is played.
B. agree to cooperate, but then cheat on the agreement.
C. agree to cooperate and then follow through on the agreement.
D. match the advertising behavior of the other player each time the game is played.
C. agree to cooperate and then follow through on the agreement.
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The ________ the reserve ratio, the ________ the money multiplier
A) larger; larger B) smaller; smaller C) smaller; larger D) None of the above are correct.
The larger the marginal propensity to consume,
a. the larger the multiplier. b. the larger the marginal propensity to save. c. the higher the income level of the economy. d. the smaller the change in income derived from a given change in government spending.