During the 1970s and 1980s, macroeconomists were busy integrating the insights of which of the following into their ideas about the economy?
A) real business cycle theory
B) Keynesian theory
C) supply side economics
D) classical macroeconomics
E) none of the above
E
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Suppose, after undergoing genetic testing, you discover that you have a health condition that could result in the emergence of a disability which would make it impossible for you to continue to work. The probability of this happening is 50%. Currently your expected lifetime earnings are $5,000,000, but if the disability hits, your expected lifetime earnings will consist primarily of income earned from government support programs -- and will not add up to more than $1 million.
a. Suppose your tastes are state-independent and the function 
can be used to
represent your tastes in the expected utility form. Are you risk averse?
b. What is the highest premium you would pay to get fully insured?
c. What is the equation (in terms of 
-- consumption in the bad state -- and 
-- consumption in the good state) that defines the full menu of actuarily fair insurance contracts?
d. Set up the optimization problem that you would solve as you choose among actuarily fair insurance contracts.
e. Solve the optimization problem. What does this imply will be the insurance contract (b,p) that you buy -- where b is the benefit level and p is the insurance premium?
f. Finally, suppose you had state dependent tastes and that the functions 
and 
allowed us to use the expected utility form to represent your tastes. How does your answer to (e) change?
What will be an ideal response?
A fall in the level of prices
A) does not affect the value of money. B) has an uncertain effect on the value of money. C) increases the value of money. D) reduces the value of money.
The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the
a. 1960s. b. 1970s. c. 1980s. d. 1990s.
Answer the question on the basis of the following information: Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions. The price of labor is P L and that of capital is P C . The marginal product of labor is MP L and that
of capital is MP C . The firm sells its product competitively at a price of P X . Refer to the given information. In competitive labor markets, the marginal cost of an additional unit of labor: A. is equal to P L × MP L . B. is equal to MP L /P L . C. is equal to P L . D. cannot be determined from the information given.