John's utility of wealth curve is shown in the above figure. He currently has total wealth of $20,000. If there is a 50 percent chance that his $10,000 car will be stolen, then his expected wealth equals
A) $0.
B) $10,000.
C) $15,000.
D) $20,000.
C
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The aggregate savings in an economy is $1,750 and the GDP of the economy is $55,000. The savings rate in the economy is:
A) 1.8%. B) 3.15%. C) 10%. D) 8.96%.
Yolanda received a $100 savings bond for her birthday. The bond pays $100 at maturity, which is in five years. If the interest rate is 3%, the bond has a present value of $86.26
Indicate whether the statement is true or false
Given the table above, suppose consumption in period two is $40,000. Then, the interest rate rises to five percent, and period-two consumption does not change. We may infer that ________
A) the income effect is stronger than the substitution effect B) the substitution effect is stronger than the income effect C) the substitution and income effects cancel out D) this consumer has a binding borrowing constraint
Backward induction is a useful tool for:
A. finding an optimal strategy in a sequential game. B. analyzing the decisions in a prisoner's dilemma-type game. C. finding an optimal strategy in a simultaneous game. D. Backward induction is useful in any of these games.