Question
There is $1 trillion on the table in U.S.-Japan trade. Trade talks are sequential, there is perfect information, and the annual discount rate (r) is
There is $1 trillion on the table in U.S.-Japan trade. Trade talks are sequential, there is perfect information, and the annual discount rate (r) is 0.11. All trade is suspended for the duration of the talks. The U.S. gets to make the first offer.
a. What should it offer Japan?
b. Should Japan accept?
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Macroeconomics Principles and Applications
Authors: Robert E. Hall, Marc Lieberman
6th edition
1111822352, 1111822354, 9781133708742 , 978-1111822354
