Which of the following statements is true?
A. A random walk process is stationary.
B. The variance of a random walk process increases as a linear function of time.
C. Adding a drift term to a random walk process makes it stationary.
D. The variance of a random walk process with a drift decreases as an exponential function of time.
Answer: B
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Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff
What will be an ideal response?
Suppose Country A has a closed economy. If Country A's GDP remains constant, but its consumption and government spending increase, then: a. Country A's national saving will decrease. b. Country A's national saving will increase. c. Country A's net taxes will increase
d. Country A's net taxes will decrease.
Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:
A. 25 units of output and charge a price of $2.50 per unit. B. 30 units of output and charge a price of $2.00 per unit. C. 15 units of output and charge a price of $3.50 per unit. D. 15 units of output and charge a price of $2.00 per unit.
Which of the following is a feature of a behavioral economic model?
A. It focuses on cognitive, emotional, and social factors that affect individual decisions. B. It is based on marginal analysis in decision making. C. It suggests that individuals always behave rationally. D. It considers incentives an unimportant tool to study human behavior.