If you exhibit endowment effect, then you
A) decide rationally when making decisions about selling but not when making decisions about buying.
B) have a strong attachment to things you already own.
C) buy something you cannot afford.
D) decide rationally when making decisions about buying but not when making decisions about selling.
B
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How long is it worthwhile to continue searching for a $20 bill that you lost if you value your time at $5 an hour?
A) About 2 hours if there is a fifty percent chance of finding it. B) About 4 hours, regardless of the probability of finding it. C) Only so long as you expect to find it within the next four hours, which could mean far more than four hours of searching. D) You cannot make a rational decision without first knowing whether you will find it. E) You should not search at all because the lost bill is a sunk cost.
What are the defining features of classical macroeconomics and what policies do classical macroeconomists recommend?
What will be an ideal response?
In which of the following situations would you prefer to be the borrower?
A) The interest rate is 9 percent and the expected inflation rate is 7 percent. B) The interest rate is 4 percent and the expected inflation rate is 1 percent. C) The interest rate is 13 percent and the expected inflation rate is 15 percent. D) The interest rate is 25 percent and the expected inflation rate is 50 percent.
In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If there is no policy intervention, we should expect ________
A) rightward shifts of IS & AD, so that both output and inflation rise B) a decrease in inflation to shift the MP curve, raising the real interest rate C) declines in both the inflation rate and the real interest rate as output rises D) a decrease in inflation to shift the AD curve, causing output to rise E) none of the above