Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise she gets to keep her $100,000 . What is her expected wealth?
a. 80,000
b. $87,000
c. $97,000
d. $99,000
c
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The substitution bias is believed to cause the consumer price index to:
a. overstate the true rate of inflation. b. understate the true rate of inflation. c. understate the true GDP deflator. d. none of these.
The classical model is one of the best that economists have for capturing the rapidly changing nature of the supply and demand for labor and ultimately for explaining recessions
a. True b. False
Countercyclical fiscal policy is viewed by most economists
a. as the perfect instrument for preventing boom and bust economies b. as a useful but imperfect instrument for reacting to boom and bust economies c. having no impact in the short run or long run. d. doing more damage than good in both the short run and long run. e. as having an impact only in the long run.
We know that diminishing returns has set in when ______ declines.
Fill in the blank(s) with the appropriate word(s).