The certainty equivalent approach to accounting for risk in capital budgeting involves
A) adjusting the discount rate used to calculate net present values.
B) adjusting the expected cash flows.
C) estimating the coefficient of variation.
D) estimating the standard deviation of the net present values.
B
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Which of the following is NOT a reason given by economists for the failure of Okun's law to account for the rise in unemployment during the recession of 2007-2009?
A) increased willingness among firms to lay off workers during recessions B) a surge in productivity during the recession C) the unusual severity of the recession D) it does not take into account the effect of the stimulus
The optimal quantity of pollution control occurs where: a. pollution equals zero
b. the total benefit of pollution control equals the total cost. c. the marginal social benefit of pollution control just equals the marginal social cost. d. the marginal external cost of pollution equals zero.
Private property rights exist when property rights are
What will be an ideal response?
In order to move the federal funds rate to the level it desires, the Fed must
A) first change the discount rate to the desired federal funds rate. B) specify the interest rate on previously issued government bonds. C) adjust the money supply to achieve the target federal funds rate. D) limit the amount of bank lending activity.