You win a lottery that pays $10,000 each year for the next 5 years beginning next year. How much are your winnings worth today?
A. $50,000
B. $45,455
C. $10,000
D. indeterminate with the given information
Answer: D
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The Federal Reserve is best suited to alleviating
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) The Federal Reserve is equally suited to alleviate all three types of unemployment.
Refer to the scenario above. The demand for Go!'s soccer balls is 2,500 units if ________
A) the price charged by Sporty is higher than the price charged by Go! B) the price charged by Go! is higher than the price charged by Sporty C) the price charged by Sporty is equal to the price charged by Go! D) the price charged by Go! is higher than the cost of producing a ball
Which of the following actions best illustrates moral hazard?
a. A person adds risky stock to his portfolio. b. A person who has narrowly avoided many accidents applies for automobile insurance. c. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10. d. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
Give a hypothetical example that shows how monetary policy could fail because of bad timing.
What will be an ideal response?