Refer to Figure 11.4. Which diagram illustrates the effect of an increase in the income tax rate?

Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the reserves account and monetary base in the context of the Three-Sector-Model? a. The reserves account becomes more positive (or less negative) and monetary base

falls. b. The reserves account becomes more negative (or less positive) and monetary base rises. c. The reserves account and monetary base remain the same. d. The reserves account becomes more negative (or less positive) and monetary base remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.

Answer the following questions true (T) or false (F)

1. A fundamental assumption in game theory is that players do not interact with each other. 2. In a Nash equilibrium, all players select non-dominant strategies. 3. Price leadership is a form of explicit collusion where one firm in an oligopoly announces a price change and expects all other firms to follow suit.