Which of the following expenditures are not included in the consumption component of GDP?
What will be an ideal response?
Purchase of a new home.
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"Institutionalization" refers to the fact that a(n) __________ percentage of funds in the United States are flowing __________ the financial markets through financial intermediaries
A) increasing; indirectly into B) decreasing; indirectly into C) increasing; indirectly out of D) decreasing; directly out of
Explain why a risk averse individual will purchase full insure if a policy is actuarially fair, but only partially insure or not insure at all, if it is not. Use graphs to support your answer.
What will be an ideal response?
In an uncertain world, private investors
a. always make decisions that lead to economic profit. b. never make decisions that generate economic losses. c. sometimes make decisions that lead to economic losses. d. rarely invest in human capital.
According to the traditional (crowding-out) view, which of the following is most likely to result if a substantial portion of government expenditures is financed by borrowing rather than taxation?
a. no change in interest rates and an increase in saving b. higher interest rates and an outflow of foreign capital c. higher interest rates and a reduction in private domestic investment d. lower interest rates and an inflow of foreign investment