Suppose Hillary was offered the following choice: Option 1 is to win $10 for sure and Option 2 is to win $20,000 with odds of 1 in 2,000 and otherwise to win nothing. If Hillary is risk loving she:
A. will choose Option 1.
C. is indifferent between the two.
D. will choose Option 1 or Option 2 with equal probability.
B. will choose Option 2.
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Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous ________ and ________
A) decrease in taxes; massive crop failure B) increase in government spending; decrease in the price of oil C) increase in taxes; increase in the price of oil D) decrease in the money supply; decrease in government spending
Suppose a basket of internationally traded goods that sells for $10,000 in the United States sells for €8,000 in the euro zone. According to purchasing power parity theory, the equilibrium exchange rate should be
a. $2.50 per euro b. $1.50 per euro c. $1.25 per euro d. $1.00 per euro e. $.50 per euro
To achieve a $500 billion increase in AD, if the MPC is 0.8, what increase in government purchases would be called for?
a. $625 billion b. $500 billion c. $400 billion d. $100 billion
On a per unit basis, economic profit can be determined as the difference between:
A. marginal revenue and product price. B. product price and average total cost. C. marginal revenue and marginal cost. D. average fixed cost and product price.