A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so that
A) anyone can be made better off.
B) no one can be made worse off.
C) someone can be made better off without making someone else worse off.
D) someone can be made better off without making everyone else worse off.
C
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Beachcomber Beatrice spent her entire wealth of $100,000 to build a beach house on the Gulf of Mexico. There is a 10 percent chance that the house will be destroyed by a hurricane. Beatrice's utility of wealth schedule is given in the table above
What is the maximum amount that Beatrice would be willing to pay for an insurance policy that pays $100,000 if her beach house is destroyed by a hurricane? A) $10,000 B) $30,000 C) $40,000 D) $60,000
A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. $100,000; $100,000 b. $100,000; $400,000 c. $400,000; $500,000 d. $400,000; $2,000,000
Recall the Application about the lack of property rights in Peru, and why clear property rights are important for economic growth in developing countries, to answer the following question(s). According to this Application, clear property rights are important for economic growth, because without a clear title to property:
A. the property cannot be used as collateral for loans. B. people will not reside on the property. C. no utilities will be available for the property. D. the property has no value.
Econometric models of the U.S. economy generally agree
A) on the quantitative impact of monetary policy over a horizon of several years. B) that an increase in money growth will increase output in the short run. C) that an increase in money growth will decrease output in the short run. D) that an increase in money growth will decrease output in the long run. E) that "rational expectations" is the best way to generate policy forecasts.