In what way does prospect theory differ from the standard theory of expected utility?
a. With prospect theory, preferences depend only on final wealth levels.
b. With prospect theory, preferences vary with initial (reference) wealth levels.
c. With prospect theory, individuals are risk loving over small losses.
d. With prospect theory, risk aversion does not play a role.
b
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Which of the following statements is TRUE?
A) Labor is always a variable input. B) Capital is always a fixed input. C) Materials are always variable inputs. D) None of the above.
Under NAFTA, environmental standards are
A) harmonized around U.S. rules. B) harmonized around Canadian rules. C) harmonized around a combination of the rules in all three countries. D) not harmonized.
A country's balance of payments shows a
A. summary record of international financial assistance received by the country. B. detailed record of the country's imports. C. summary record of a country's economic transactions with foreign residents and governments over a year. D. detailed record of the import and export of services for the country.
A large open economy has desired national saving of Sd = 1200 + 1000rw, and desired national investment of Id = 1000 - 500rw. The foreign economy has desired national saving of 
= 1000 + 1000rw, and desired national investment of 
= 1800 - 500rw. Calculate the equilibrium values of rw, CA, CAFor, S, I, SFor, and IFor.
What will be an ideal response?