Most people buy insurance because they
a. are risk lovers
b. enjoy the gamble
c. are risk neutral
d. want to avoid gambles
d
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What is the difference between inflation and deflation?
A) Inflation is a sustained decrease in the price level whereas deflation is a sustained increase in the price level. B) Inflation is a sustained increase in the price level whereas deflation is a sustained decrease in the price level. C) Inflation is a measure of relative prices whereas deflation is a sustained increase in the price level. D) None of the above.
If the Fed were required to maintain an absolutely constant growth rate of high-powered money, then the growth rate of the money supply
A) would be zero. B) would be constant at the growth rate of H. C) would be constant but not necessarily at the growth rate of H. D) would fluctuate along with the parameters in the money-creation formula.
The impact of a strike is limited to the ability of the union to
A) prevent replacement workers from continuing their work. B) lower its wage demands of non-union members. C) control the pension fund. D) none of the above.
The opportunity cost of capital is
A) the rate of return realized on an investment. B) the rate of return that could be earned by the owner's capital were it used elsewhere. C) the rate used to calculate a firm's tax liability. D) the rate of interest the government uses to calculate legal business tax penalties.