An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply.
B. increase in aggregate demand.
C. increase in short-run aggregate supply.
D. decrease in aggregate demand.
Answer: D
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Adriana wants to try working as an independent contractor this summer. She has a 50 percent chance that she will make $9,000 and 50 percent chance that she will make nothing. Her utility of wealth curve is shown in the figure above
What's Adriana's cost of risk? A) $2,500 B) $2,000 C) zero D) $40
A key component of the Keynesian model is that
A. prices are flexible. B. wages are flexible. C. people are not fooled by money illusion. D. prices are sticky.
Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. If the firm finds it can
borrow funds at an interest rate of 10 percent, the firm should: A. not purchase the machine because the expected rate of return exceeds the interest rate. B. not purchase the machine because the interest rate exceeds the expected rate of return. C. purchase the machine because the expected rate of return exceeds the interest rate. D. purchase the machine because the interest rate exceeds the expected rate of return.
If stock prices are in-line with their fundamental determinants and interest rates do not change, then a change in the profit expectations by 20%
A. will change the stock price by exactly 20% regardless of the expected distribution of the earnings over time. B. will change the stock price by more than 20% regardless of the expected distribution of the earnings over time. C. will change the stock price by more or less than 20% depending on the expected distribution of the earnings over time. D. will change the stock price by less than 20% regardless of the expected distribution of the earnings over time.