What is the expected payoff of an investment that yields $1,000,000 with a probability of 0.001 and $0 with a probability of 0.999?
A. $1,000,000
B. $1,000
C. $10,000
D. $500,000
B. $1,000
You might also like to view...
An industry's output is produced at the lowest possible cost when
a. firms' marginal costs are equal. b. firms minimize their average costs. c. all firms earn the same profit. d. output is evenly divided among the industry's firms.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
If the public is not sure about the central bank's motives, then
A) initial releases of data may be less accurate than later data releases. B) the predominant source of shocks to the economy must be shocks to the LM curve. C) central bankers should try to stabilize the inflation rate. D) modern macroeconomic modeling techniques will fail.
The Fed can attempt to decrease the federal funds rate by
A) lowering the reserve requirement, which increases the money supply. B) lowering the reserve requirement, which decreases the money supply. C) raising the reserve requirement, which increases the money supply. D) raising the reserve requirement, which decreases the money supply.