Use the following table to illustrate the importance of macroeconomic policy coordination

Show that the two governments would have been happier if the two of them had adopted looser monetary policies, but given the policies that the other government did adopt, it is not in the interest of any individual government to change its course. Assume that each country wishes to get the biggest reduction in inflation rate at the lowest cost in terms of unemployment. This means that each country maximizes-??/?U, the inflation reduction per point of increased unemployment.

One needs to translate the outcomes of the table above into policy payoffs. Assume that each country wishes to get the biggest reduction in inflation rate at the lowest cost in terms of unemployment. This means that each country maximizes -??/?U, the inflation reduction per point of increased unemployment. This leads to the following table. The outcome of this game is on the lower right hand side of the table, where the two countries use very restrictive monetary policies rather than cooperating and using the better somewhat restrictive policies for both of them.

Economics

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Long-run market supply curves are downward sloping if

A) firms are identical. B) the number of firms is restricted in the long run. C) input prices fall as the industry expands. D) All of the above.

Economics

Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

a. live longer. b. have a lower illiteracy rate. c. have a lower infant mortality rate. d. all of the above.

Economics