A Nash equilibrium occurs when:
a. a unilateral move by a participant makes him better off.
b. one can deviate from the equilibrium and improve the outcome.
c. no one can move from the equilibrium and improve the outcome.
d. participants have an incentive to deviate from the equilibrium.
e. no one is better off.
c
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The AS/AD model with sticky prices predicts that, in the long run, a reduction of the money supply results in:
a. lower prices and lower output. b. no change in prices and lower output. c. lower prices and no change in output. d. no change in prices or output.
The multiplier principle explains how
a. any change in the economy will be magnified. b. $1 invested will increase GDP by more than $1. c. expenditures and incomes increase as investment increases. d. All of the above are correct.