Which of the following gambles should be considered more attractive?
A. If heads, you win $200; if tails, you lose $198.
B. If heads, you win $5; if tails, you lose $10.
C. If heads, you win $9; if tails, you lose $6.
D. If heads, you win $6; if tails, you lose $4.
Answer: C
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If the cross elasticity of demand is -5 between french fries and orange drink, then french fries
A) and orange drink are complements. B) and orange drink are substitutes. C) are a normal good and orange drink is an inferior good. D) are an inferior good and orange drink is a normal good.
The participation rate is the number of people:
A. employed and unemployed divided by the population aged 16 years and older. B. employed divided by the population aged 16 years and older. C. employed and unemployed divided by the labor force. D. employed divided by the labor force.
Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except
A) technological advancement in the production of electric car batteries. B) an increase in the number of manufacturers of electric cars. C) a decrease in the price of lithium, which is used in the electric car batteries. D) an increase in the price of gasoline.
Answer the following statements true (T) or false (F)
1. The transactions demand for money will decrease when income decreases, but it is not much affected by interest rates. 2. Holding money as an asset presents a risk of capital loss. 3. There is an asset demand for money because households and business firms use money as a store of value. 4. A decrease in the nominal GDP, other things remaining the same, will decrease both the total demand for money and the equilibrium rate of interest in the economy. 5. If nominal GDP is $2,000 billion and the amount of money demanded for transactions purposes is $500 billion, then on average each dollar will be spent about four times a year.