a. Using the game theory matrix, explain how firms make decisions when they behave collusively and non-collusively.
b. In your everyday life, you make strategic decisions. Using the game theory concept, explain one of these decisions.
Question 2
a. In the economy, when decisions are made, one of the key variable that is considered is the anticipated rate of inflation. Explain, using the concepts of real and nominal income and interest rate how unanticipated inflation can impact the labour and financial market.
b. Reflect on an occasion where you or someone you know has been affected by unanticipated inflation.
c. Can unemployment rate rise in a given year even if the economy added a hundred thousand new net jobs? Explain.
Question 3
a. In a conversation, someone mentioned that “Australia’s economic grew because the market value of total production in 2016 was 1.11 trillion and in 2017 it was 1.14 trillion”. Upon checking you found that in these two years Australia’s GDP price deflator increased from 104.2 to 105.7. Explain with numerical calculations if the statement is factually accurate.
b. Provide 3 indicators the government will look at to predict where the economy will be in the next six months and 3 indicators to describe which phase the economy is at present
c. Assume you own a new car dealership. Reflect on which phase(s) of a business cycle your sales will most likely increase and in which phase(s) will you experience a decline in sales. Justify your answer.