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1' The Fed considers lowering (L) or raising (R) the interest rate, or keeping it the same (K). Simultaneously, the government decides between issuing debt
1' The Fed considers lowering (L) or raising (R) the interest rate, or keeping it the same (K). Simultaneously, the government decides between issuing debt (D) or running a balanced budget (B). After iterated deletion of dominated strategies. what is the outcome? Government 5, 5 O, O 10, -10 Fed K O Fed lowers the interest rate, and the government balances the budget. 0 Fed keeps the interest rate the same, and the government balances the budget. 0 Fed keeps the interest rate the same, and the government issues debt. 0 Fed raises the interest rate, and the government issues debt. 2 Which. it any. of Player 1': strategies l5 dominated In this game? Player 2 0,5 2,1 3,2 Player 1 M None
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