Which of the following investments is part of a positional arms race?
A. Playing golf for fun
B. Watching your friend train for a soccer game
C. Studying hard for your economics exam because your professor grades on a curve
D. Renting movies for the weekend
Answer: C
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What will be an ideal response?
When firms are faced with repeating games, such as the prisoner's dilemma, they:
A. are more likely to collude. B. are less likely to collude. C. will tend to act more like perfectly competitive firms. D. will be more likely to renege on agreements.
Suppose at present people hold a quantity of money equal to 85% of nominal GDP. What happens to velocity if people wish to increase their money holdings to 80% of nominal GDP?
A) Velocity can increase or decrease depending on people's tastes and preferences toward money. B) Velocity is unaffected. C) Velocity increases. D) Velocity decreases.
Pavel is considering buying a $10,000 bond with no expiration date that generates yearly payments of $500. If the price of the bond were to fall to $9,000:
A. the bond's rate of return would rise from 5 percent to 5.6 percent. B. the bond payments would fall to $450 per year. C. Pavel should definitely buy the bond because the price is lower. D. Pavel should definitely not buy the bond because the lower price means it is worth less.