Refer to Figure 19-9. According to the graph, is there a surplus or shortage of Saudi Arabian riyal in exchange for U.S
dollars? To maintain the pegged exchange rate, will the Saudi central bank need to buy riyal in exchange for dollars or sell riyal in exchange for dollars? How many riyal will the Saudi central bank need to buy or sell?
There is a surplus of riyal in exchange for U.S. dollars, because at the pegged exchange rate the quantity of riyal demanded is less than the quantity of riyal supplied. To maintain the pegged exchange rate, the Saudi central bank will have to buy riyal in exchange for dollars. The Saudi central bank will have to buy 70 million riyal per day.
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In the figure above, in order to promote an efficient allocation of resources, the government could impose a tax equal to
A) zero. B) $250 per unit. C) $150 per unit. D) $100 per unit.
Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. Which of the following is the outcome of the dominant strategy without cooperation?
A) Both confess. B) Both don't confess. C) Bob confesses while Harry does not confess. D) Harry confesses while Bo does not confess.