A risk averse individual
a. values a lottery at more than its expected value
b. values a lottery at exactly its expected value
c. values a lottery at less than its expected value
d. tends to play lots of lotteries
c
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For the past 40 years the Federal Reserve has expressed policy in terms of a target value for:
A. open market operations. B. bank reserves. C. the Federal Reserve discount rate. D. the federal funds rate.
In the Keynesian model, consumption
A) is positively related to income but saving is not systematically related to either income or interest rates. B) and saving are positively related to the real interest rate. C) and saving are positively related to income. D) is positively related to income and saving is negatively related to the stock market.
If workers and firms expect that inflation will be 3 percent next year, and real wages are not changing over time, by how much will nominal wages increase?
A) more than 3 percent B) 3 percent C) less than 3 percent D) depends on actual inflation for next year
Ellis, a staunch environmentalist, is hired right of graduate school by the Environmental Protection Agency. He is ecstatic about having the opportunity to promote what he believes to be the public interest
Within a few years he gets promoted to manager of his bureau. Shortly after his promotion he successfully argues for a 30 percent increase in his department's budget. How might Ellis benefit personally from an increased budget? Now suppose that it was known to be true that the best thing for the environment was for a large portion of Ellis' budget to be shifted to another department. Why might Ellis fight this change? Why might he not?