When Lucian starts his new job, he is given the option to contribute to his retirement fund, which the company will match up to 5 percent of his base salary. Lucian knows he can afford to contribute to his retirement fund; he only needs to file a form to
activate the contributions and matching. According to prospect theory, if Lucian is typical in his behavior, we would expect him to:
A. take full advantage of the matching contribution because that would maximize his financial
well-being.
B. not file the form to start the contribution and match.
C. negotiate with his boss for a higher match in order to increase his returns.
D. only start contributions if the retirement portfolio is heavily weighted in high-return assets.
Answer: B
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All of the following actions shift the aggregate demand curve to the right EXCEPT
A) the Fed raises the interest rate. B) an increase in government transfer payments. C) inflation is expected to rise next year. D) an increase in expected future profit. E) a decrease in taxes.
A union requirement that a fireman has to be hired to work in a diesel locomotive would be an example of
A) work expansion. B) featherbedding. C) work requirements. D) work stabilization.
Which of the following is characteristic of the marginal revenue product schedule for a resource?
a. It approximates the firm's demand curve for the resource. b. It measures the change in total revenue resulting from employing an additional unit of the resource. c. It is determined by multiplying the marginal product of the resource by the marginal revenue of the good produced. d. All of these are true.
When the demand for alternative investments decreases, the market for a particular bond adjusts by
a. having the supply of that bond increase. b. having the supply of that bond decrease. c. having the demand for that bond increase. d. having the demand for that bond decrease.