There are two states of the world. In state one the person receives one hundred dollars. In state two the person receives fifty dollars. If the person is rational and their expected return is $87.50, then the probability with which state one occurs must be
a. 0.25.
b. 0.50.
c. 0.75.
d. 1.00.
c. 0.75.
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Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. 
In the equilibrium this game, Tracy chooses the ________ branch, and then Amy chooses the ________ branch.
A. top; bottom B. bottom; top C. bottom; bottom D. top; top
According to the quantity theory of money, inflation causes an increase in the money supply
Indicate whether the statement is true or false
Which asset is sometimes referred to as a bank's secondary reserves?
A) vault cash B) U.S. government securities C) repurchase agreements D) federal funds
In the Keynesian aggregate expenditure graph (Figure 5-5), the 45 degree line is meant to indicate that:
a. planned aggregate expenditure always equals aggregate income. b. savings must equal investment. c. actual aggregate expenditure must equal aggregate income. d. actual income must equal planned income. e. none of the above.