Suppose $100 invested next year results in a return of b two years from now. If individuals do not discount the future but have a beta of 0.5 (in the beta-delta model), for what range of b will an individual plan to make the investment but then reverse course next year?
What will be an ideal response?
From $100 to $200.
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If the federal government budget deficit increases, then interest rates will _____, the U.S. dollar will _____, and the foreign trade deficit will _____
a. increase; depreciate; decrease b. increase; appreciate; increase c. increase; depreciate; increase d. decrease; appreciate; increase e. decrease; depreciate; decrease
The laws that created the Fed give it some specific recommendations about what goals it should pursue so it has little discretion in making policy
a. True b. False Indicate whether the statement is true or false
Consider a Cournot oligopoly consisting of five identical firms producing good X. If the firms produce good X at a marginal cost of $7 per unit and the market elasticity of demand is ?3, determine the profit-maximizing price.
A. $7 per unit B. $5.25 per unit C. $4.20 per unit D. $7.50 per unit
________ states that if previously existing distortions exist, a distortionary tax may actually improve efficiency.
A. The rule of reverse distortion B. The benefits-received principle C. The principle of neutrality D. The principle of second best