The independence axiom implies that if I prefer a bottle of wine over a six pack of beer I will prefer half a bottle of wine with a bag of pretzels over half a sixpack of beer with a bag of pretzels.
Answer the following statement true (T) or false (F)
False
Rationale: The independence axiom is not an axiom about tastes over bundles of goods; it is an axiom about tastes over risky outcome bundles.
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The situation when the price of most goods and services are falling over time is called:
A. disinflation. B. a boom. C. deflation. D. inflation.
Financial intermediaries are institutions that facilitate the movement of funds from savers to investors because they
A) guarantee positive returns on investments. B) eliminate the costs of negotiating such transactions. C) eliminate risks. D) provide liquidity.
Monetary policy will have a large income effect provided the
A) IS curve is flat. B) LM curve is steep. C) IS curve is steep. D) LM curve is flat.
Investments with _____ risk usually carry a _____ return
a. higher; lower b. lower; higher c. zero; high d. higher; higher