1. (b) Assume that two countries are competitors in the international trade markets. The two governments are thinking about whether it is profitable to adopt a free trade policy or not. The entries in the table below are showing (in millions of pounds) the gains of each policy. Find the Nash equilibrium. Analyse how you conclude to your answer. Free Trade Policy 60,60 20,70 Imposing Restrictions 70,20 30,30 The Nash equilibrium refers to the strategy that would benefit both the parties at the same time. In the above question the pay offs of Country A are in the right hand side while the pay offs of Country B are in the left hand side. In the above case if Country B assumes: 1. Country A takes Free Trade Policy Or Imposing Restrictions in both the cases Country B will choose IMPOSING RESTRICTIONS as the pay off in adopting this strategy is more. Hence this is the dominant strategy for the company. In the above case if Country A assumes: 1. Country B takes Free Trade Policy or Imposing Restrictions in both the cases Country A will choose IMPOSING RESTRICTIONS as the pay off in adopting this strategy is more. Hence this is the dominant strategy for the company. In this case if we get 30, 30 as the Nash equilibrium since by following this strategy both the countries are at profit. (c) Modify your answer when the table of gains are changed as: Free Trade Policy 60,60 70,80 Imposing Restrictions In the above case if Country B assumes: 1. Country A takes Free Trade Policy Or Imposing Restrictions in both the cases Country B will choose IMPOSING RESTRICTIONS as the pay off in adopting this strategy is more. Hence this is the dominant strategy for the company. In the above case if Country A ass... ... middle of paper ... ...he currency and to maintain the exchange rate the Government needs to sell out the foreign reserves of the Bank. Hence the monetary policies are ineffective under the fixed exchange rates. 2 1 Y1 Y2 Paula, H(1973) On Measuring of Monetary policy and concepts, McGraw Hill, London Press, London, 88-121 Carlton, Jacob, G (1890) Keynesian Theory Of Unemployment, Journal of Business Ron, Walt. V(2001) The Theories of Fixed Exchange Rate, Business Economics papers, vol11, 345-67 Nelly, Jackson & Von. G(1994) The Game theory and its concepts in an economy, Moira, Ben. C(1920) Monetarism and its policies, Advanced Macroeconomics, 213- Warren, Ven. S(2004) Nash Equilibrium and its concepts used in an Economy, Journal of Business Economics, 7, 345-67 Samuel, Andy(1993) Free International Trade being used widely, Business Economic Papers, vol14, 421-56
Despite attempting to predict the eventual outcome of the negotiation, I did not anticipate the confrontations between Local H-56 and the management of Hotel Zinnia. Although they initially agreed to engage in integrative bargaining, the union and management subsequently entered an intense negotiation. When Local H-56 presented its proposal of wage increases and health insurance, management immediately responded with a counterproposal that surprised the union. Both the union and management eventually behaved confrontationally, accusing each other of bargaining unreasonably and focusing on the trivial aspects of the negotiation. Moreover, as the union and management felt increasingly frustrated, they suffered from a lack of unity in their teams. The union could not fulfill its objectives because its lead negotiator prevented other team members from contributing to the negotiation. On the other hand, several team members of management struggled to assert their authority as the lead negotiator. After observing these issues, I ultimately believe that the union and management failed to achieve their individual objectives. Moreover, by approaching the negotiation with a zero-sum strategy, I assert that the union and management failed to reach a mutually beneficial contract. At the same time, both sides of the bargaining table lacked cohesive teams and therefore struggled under the pressure of the negotiation.
An answer to the puzzle will be found in solutions that are in equilibrium. An equilibrium in informed rational self-interest, or a Nash equilibrium, is any solution to the problem whereby neither party could do better by altering its position. However, this is a general and broad definition. Further stipu...
... make anything, because their partner would begin to defect as well. They were coaxed to cooperate by the prisoner’s dilemma, collective security and democratic peace theories, which is proven by the end results of the game where everybody’s amounts were fairly similar if not equal to one another. Instead of fighting to be more powerful, counties joined together to be equal.
The United States free trade agenda includes policies that seek to eliminate all restrictions and quotas on trade. The advantages of free trade can be seen through domestic markets and the growth of the world economy. T...
In the given course I am doing a comprehensive literature review of ‘cooperative game theory in the field of supply chain management.’ Cooperative game theory comes in nature when more than two parties in the supply chain network come together and form alliances to gain more payoffs as compared to what they were obtaining alone.
Week two we had to discuss how the equilibration process is identified in the supply or demand. Business managers need to understand how market equilibrium is sought to follow changes between economic principles, specifically supply, market, and on how business can determine in everyday decisions. This paper is sought to analyze with support ideas that are consider towards the law of demand, and the law of supply it will acknowledge the efficient market theory in which it will explain surplus and shortage.
In an economy recently plagued with housing market crashes and financial crisis, we can easily see the vital functions that a monetary policy has on anticipating and preventing instability in our economy. Understanding how monetary policy works and how it’s affected by either rules or discretion is crucial, and all aspects must be taken into account to establish the most effective choice for our economy.
When an economy is in a recession the government has to act differently in order to increase demand and help businesses survive. The money supply method of the monetary policy is a good idea in theory but because of the current economic crisis, banks don’t feel secure enough to lend out there money as the return isn’t guaranteed.
Game Theory deals with two or more decision makers who are called players, who compete as opponents against one another. In game theory, the players select a strategy without any prior knowledge of the other player’s strategy. Siliconfareast.com defines game theory as “a concept that deals with the formulation of the correct strategy that will enable an individual or entity, when confronted by a complex challenge, to succeed in addressing that challenge.”
This is a monetary policy which involves the government’s intervention to curb disorderly trends in the foreign currencies level. In case the quantity of a local currency goes down, the central bank uses the foreign currencies to buy its currency from the foreign economies. This ensures that the economy has ample home currency and thus enough money in circulation.
The term Monetary policy refers to the method through which a country’s monetary authority, such as the Federal Reserve or the Bank of England control money supply for the aim of promoting economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if their aim is neither inflation reduction nor growth stimulation; or, accommodative, if aimed at stimulating growth. Monetary policies have a great impact on the economic stability of a country and if not well formulated, may lead to economic calamities (Reinhart & Rogoff, 2013). The current monetary policy of the United States Federal Reserve while being accommodative and expansionary so as to stimulate growth after the 2008 recession, will lead to an economic pitfall if maintained in its current state. This paper will examine this current policy, its strengths and weaknesses as well as recommendations that will ensure economic stability.
At the new equilibrium you have a shortage of supply which pushes the price up which represents cost push inflation.
Here's the scenario: "Recent global developments have pushed the economy into a slump. Industrial production is sluggish and it has become difficult to stimulate demand. The Real GDP is slipping and though inflation looks to be under control, unemployment seems to be soaring. As the Chairman of the Federal Reserve appointed by the President of Oval Office, an effective control of the money supply has to be done.
As with all markets and their respective economies, having equilibrium is one of the key factors of a successful system. Although most markets do not reach equilibrium, they attempt at getting close. There are numerous methods devised to reach equilibrium, whether they involve human intervention directly or a cumulative decision by all factors involved. These factors may be a seller's willingness to lower overall revenue, or a buyer's willingness to withhold some demand for a certain product. Of course, the basics of supply and demand retrospectively control the equilibrium in the market.
In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...