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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

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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 (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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