Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. 
Figure 17.1 Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the bonus. If Dmitri takes the offer that maximizes his expected utility and is he is risk averse, then
A. he will take the first offer.
B. he will take the second offer.
C. he is indifferent between the offers-both yield the same expected utility.
D. Indeterminate from the given information-we cannot say what he will do.
Answer: A
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According to the interest-rate-based monetary policy transmission mechanism, a decrease in the money supply will
A) lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending. B) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending. C) lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending. D) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
People expect an inflation rate of 5 percent and the real interest rate is positive. Consequently the nominal interest rate will be
A) more than 5 percent. B) 5 percent. C) less than 5 percent. D) Without more information it is impossible to tell if the nominal interest rate will be more than, less than, or equal to 5 percent.
Marginal product is
A) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. B) total amount of output produced. C) total amount of output produced divided by the quantity of labor employed. D) total amount of output produced divided by price of the output.
Which of the following is TRUE for a perfect price-discriminating monopoly?
A) P = MR for each unit sold B) P = ATC for each unit sold C) P = MC for each unit sold D) P > MC for each unit sold