The income effect is the
A) increase in the interest rate caused by an increase in Real GDP.
B) increase in the interest rate due to a higher expected inflation rate.
C) decrease in the interest rate due to an increase in the supply of loanable funds.
D) change in national income brought about by a change in interest rates.
E) rate of change in national income brought about by a change in the supply of money.
Answer: A) increase in the interest rate caused by an increase in Real GDP.
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How does monopoly arise?
What will be an ideal response?
Leisure is
A) wasteful to society. B) an inferior good. C) a complementary good to labor. D) a normal good.
Market economies produce outcomes that
a. are virtually ideal in all respects. b. are inferior to most other systems. c. are, in some respects, far from ideal. d. are virtually indistinguishable from command economies.
Consider the following two investments. One is a risk-free investment with a $100 return. The other investment pays $2,000 20% of the time and a $375 loss the rest of the time. Based on this information, answer the following: (i) Compute the expected returns and standard deviations on these two investments individually. (ii) Compute the value at risk for each investment. (iii) Which investment will risk-averse investors prefer, if either? Which investment will risk- neutral investors prefer, if either?
What will be an ideal response?