In a liquidity trap situation:
a. The Fed could not appreciably lower short term interest rates
b. If the Fed added reserves to the banking system, it would have little effect on investment.
c. Traditional monetary policy would be relatively weak in its effects on aggregate demand.
d. All of the above are true.
d
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The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game
A) does not exist. B) occurs when both firms set a low price. C) occurs when both firms set a high price. D) occurs when firm A sets a high price and firm B sets a low price.
A head tax applied to each person in the United States would
A. always be proportional. B. not significantly distort incentives to work. C. generally be a progressive tax. D. likely have significant shifting of tax incidence.