A Commitment Problem Exists When People Cannot Achieve Their Goals

question 75

Multiple Choice

A commitment problem exists when people cannot achieve their goals because:

• A)they cannot make credible threats or promises.
• B)they cannot play their dominant strategy.
• C)the payoff matrix is unknown.
• D)they do not have the first-mover advantage in a sequential move game.

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Definitions:

National Saving

The total amount of saving in a country, which includes both private savings and public (government) savings.

Closed Economy

An economic system that does not engage in international trade with outside countries, relying on its own resources.

Accounting Identity

A fundamental equation that must always hold true, often without regard to time or specific instances, in accounting and economics.

Government Purchases

Expenditures by the government sector for goods and services that are consumed within the current period.