The winners curse is worse when
a. There are fewer bidders
b. Your rivals do not have as much information as you do
c. Your rivals have more information than you do
d. All of the above
c
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If the real interest rate is -1.4% and the nominal interest rate is 0.6%, expected inflation equals
A) -2% B) -0.8% C) 0.8% D) 2%
Analysis of the Great Depression indicates that
a. even though monetary and fiscal policies were highly expansionary, they were unable to offset the economic plunge. b. even though monetary policy was expansionary, restrictive fiscal policy dominated during the 1930s. c. a reduction in tax rates could not prevent the economic downturn from spiraling into a depression. d. the severity of the economic decline, if not its onset, was the result of perverse monetary, fiscal and regulatory policies.
Suppose studies showed that only 15 percent of all teens wear their bike helmets while riding their bikes. If policymakers wish to have more teens wear their bike helmets, they should:
A. not inform teens of the social norm. B. Informing them of the social norm will have no impact on their individual situation. C. inform teens of the social norm. D. The statistic is likely to influence their personal decision, but it is impossible to predict in what way without more information.
Foziah is a policy maker who is very concerned about inflation. Should she support a law that will index federal workers’ pay to the inflation rate? Explain why or why not.
What will be an ideal response?