According to prospect theory, people tend to favor default options. This is known as the:
A. self-serving bias.
B. availability heuristic.
C. status quo bias.
D. framing bias.
Answer: C
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Refer to the game between James and Theodore depicted in Figure 12.1. Which of the following is true?
A. James's dominant strategy is to choose Up.
B. James's dominant strategy is to choose Down.
C. Theodore's dominant strategy is to choose Left.
D. Theodore's dominant strategy is to choose Right.
If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your
A. real rate of interest is 13 percent. B. expected rate of inflation is 5 percent. C. expected rate of inflation is 13 percent. D. real rate of interest is 36 percent.
Units of CapitalNumber of WorkersOutput/Day50051405290531505420055235
Refer to Table 2.3. The principle of diminishing returns first occurs when how many workers are hired?
A. 2 B. 3 C. 4 D. 5
With a pure gold standard
A) a nation may not pursue an independent monetary policy. B) an inflow of gold will reduce the money supply of a country. C) there will be a tendency for reducing world trade. D) a balance of payments deficit or surplus does not occur.