If the underground economy is sizable, then GDP will:
A. understate the economy's performance.
B. overstate the economy's performance.
C. fluctuate unpredictably.
D. accurately reflect this subterranean activity.
Answer: A
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Kyle and Stan are playing Odds or Evens, where Kyle is designated as the "odd" player and Stan is designated as the "even" player. They decide to play the game 10 times. The mixed-strategy equilibrium in this zero-sum game occurs when
A) each player plays a pure strategy. B) one player plays a pure strategy and the other plays a mixed strategy. C) both players play their ideal mixtures. D) There is never an equilibrium in a zero-sum game.
One flaw of pure capitalism is that a person who owns no resources could starve
a. True b. False
If product Y is an inferior good, an increase in consumer incomes will:
a. Not affect the sales of product Y b. Shift the demand curve for product Y to the left c. Result in a surplus of product Y d. Shift the demand curve for product Y to the right
A stock has an annual dividend of $10.00 and it is expected not to grow. It is believed the stock will sell for $100 one year from now, and an investor has a discount (interest) rate of 6% (0.06). The dividend discount model predicts the stock's current price should be:
A. $103.77 B. $94.67 C. $106.60 D. $116.00