Which of the following is a flow variable?
A) consumption B) savings C) wealth D) population
A
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Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. 
In the equilibrium of this game, Lee chooses ________, and then Cody chooses ________.
A. aggression; cooperation B. cooperation; cooperation C. cooperation; aggression D. aggression; aggression
Moral Hazard describes a situation in which
a. buyers or sellers react to market signals by altering their behavior in ways that generate adverse market outcomes b. an action by an individual that endangers others c. an activity destroys all market outcomes d. rational behavior is removed from market decision making e. irrational behavior creates perverse market outcomes
Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal
a. cost of leaving was greater than the marginal benefit. b. benefit of leaving was greater than the marginal cost. c. benefit of teaching was greater than the marginal cost. d. All of the above are correct.
If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?
A. Only unanticipated policies will be effective once individuals understand how monetary policy works. B. Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take. C. Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making. D. Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.