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The Credit Multiplier (Deposit Multiplier) in a commercial banking system equals:
ACRR / Total Deposits
B1 / Cash Reserve Ratio (1 / CRR)
C1 - Marginal Propensity to Save
DTotal Loans / Total Capital
In game theory, a Dominant Strategy is defined as a strategy that:
AIs optimal only if the competitor cooperates
BMaximizes joint payouts for all players combined
CGuarantees zero loss under all conditions
DYields the best outcome for a player regardless of what the competitor chooses
A Nash Equilibrium in game theory occurs when:
ANo player has an incentive to unilaterally change their chosen strategy
BBoth players achieve maximum theoretical payouts
CPlayers alternate choices in every round
DOne player forces the other to exit
The substitution effect of a price change according to Hicks is isolated by keeping:
AReal income (utility level) constant
BNominal money income constant
CTotal expenditure constant
DMarginal utility of money constant
Slutsky’s substitution effect differs from Hicks’s because Slutsky holds constant the consumer’s:
AUtility level
BPurchasing power (ability to buy the original basket of goods)
CMarginal rate of substitution
DNominal income without any tax adjustment
An Engel Curve shows the relationship between:
AQuantity demanded of a good and its market price
BQuantity supplied of a good and factor costs
CQuantity demanded of a good and consumer income level
DPrice of a good and price of its substitute
If the income elasticity of demand for a good is negative, the good is classified as an:
ANormal good
BLuxury good
CNecessity good
DInferior good
The Envelope Curve in cost theory refers to the firm’s:
ALong-Run Average Cost (LRAC) curve
BShort-Run Marginal Cost (SMC) curve
CAverage Variable Cost (AVC) curve
DTotal Fixed Cost (TFC) curve
In the long run, a firm under monopolistic competition operates where demand (AR) is tangent to the:
AMinimum point of the LRAC curve
BLong-Run Average Cost (LRAC) curve on its downward-sloping segment
CMarginal Cost curve at its peak
DTotal Cost curve at the origin
The Stackelberg Model of oligopoly differs from the Cournot model because firms:
AMove simultaneously setting prices
BCollude explicitly to form a cartel
CMove sequentially as a leader and a follower firm
DFace a completely vertical demand curve