Britain's 1992 recession is probably the result of:
A) the struggle to reconcile monetary and fiscal policy.
B) the adherence to the ERM, which required Britain to raise interest rates to maintain exchange parity.
C) high unemployment rates, which are a product of the generous welfare system.
D) poor planning for the conversion to the euro.
Answer: B) the adherence to the ERM, which required Britain to raise interest rates to maintain exchange parity.
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Which of the following statements is true?
A) In any game, the best response of a player is also her dominant strategy. B) The best response of a player is not always her dominant strategy. C) A prisoners' dilemma game is an example of a zero-sum game. D) A prisoners' dilemma game is an example of an extensive-form game.
In the long run, a competitive firm has a marginal product of labor, MPL = L-1. The output price is $20 per unit and the wage is $7.25 per hour. The long-run labor demand curve for the firm is
A) 20L-0.05. B) 7.25L-0.05. C) 20L-1. D) 7.25L-1.