Refer to Figure 7-2. At the efficient equilibrium
A) economic surplus is zero. B) economic surplus is negative.
C) economic surplus is minimized. D) economic surplus is maximized.
D
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By itself, a supply shock, such as a hike in the price of oil, can
A) cause real GDP to permanently decrease year after year. B) not result in persisting inflation. C) be inflationary as long as there is no policy response. D) result in persisting inflation if aggregate supply persistently increases. E) result in a persisting wage-price spiral.
A strategy A is "dominant" for a player X if
A) strategy A contains among its outcomes the highest possible payoff in the game. B) irrespective of any of the possible strategies chosen by the other players, strategy A generates a higher payoff than any other strategy available to player X. C) strategy A is the best response to every strategy of the other player. D) strategy A is the best response to the best strategy of the other player. E) every outcome under strategy A generates positive payoffs.