A Nash Equilibrium

question 23

Multiple Choice

A Nash equilibrium:

• A) will always be reached.
• B) is always reached in game playing.
• C) sometimes may not be reached because people assume others react rationally.
• D) sometimes may not be reached because people do not assume that others act rationally.

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Definitions:

Savings

The portion of income that is not spent on current expenditures and instead set aside for future use.

Disposable Income

The disposable capital for households' spending and saving endeavors after income taxes.

Consumption

The process of purchasing goods and services to fulfill the needs and wants of individuals.

Average Propensity

The ratio of total consumption to total income, indicating how much income is spent rather than saved.