Which of the following statements captures the meaning of transitivity of preferences?
a. If A is preferred to B, then B is less preferred than A.
b. If A is preferred to B, and B is preferred to C, then A is preferred to C.
c. If A is preferred to B and B is preferred to C, then the preference for A over B is stronger than the preference for B over C.
d. If A is preferred to C, then there exists B such that A is preferred to B and C is preferred to A.
b
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Janie convinces her uncle Seymour that she is on the Dean's list each semester and asks him to lend her $5,000 to help pay for her college tuition for the upcoming year, assuring him that she will be able to pay him back as soon as she graduates and
gets a job. In reality, Janie has flunked out of college, has spent all her savings on food for her 40 ferrets, and wants to use the money to bail her boyfriend out of jail. Not being honest with her uncle when asking for the loan is an example of ________, and spending the borrowed money to pay her boyfriend's bail is an example of ________. A) moral hazard; asymmetric information B) moral hazard; the principal-agent problem C) adverse selection; moral hazard D) the principal-agent problem; adverse selection
An investment opportunity has two possible outcomes. The expected value of the investment opportunity is $250. One outcome yields a $100 payoff and has a probability of 0.25. What is the payoff of the other outcome?
A) -$400 B) $0 C) $150 D) $300 E) none of the above
Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
a. in both German GDP and U.S. GDP. b. in German GDP, but is not included in U.S. GDP. c. in U.S. GDP, but is not included in German GDP. d. in neither German GDP nor U.S. GDP.
If a British businessman sells U.S. government securities to a U.S. buyer, how will this item be entered in the balance of payments?
A. It will appear in the financial account as an increase in foreign assets held by U.S. residents. B. It will appear in the trade account as an import. C. It will appear in the financial account as a decrease in the U.S. assets held by foreigners. D. It will appear in the trade account as an export.