If the Ricardian equivalence proposition is correct, then an increase in the deficit will lead to
A) an increase in private saving.
B) a decrease in investment spending.
C) a lower standard of living in the future.
D) all of the above
E) none of the above
A
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Steve owns a motorcycle valued at $5,000 and that is his only asset. There is a 5 percent chance that Steve will have an accident within a year. If he does have an accident, his motorcycle is worthless
Steve's utility of wealth curve is shown in the figure above. An insurance company agrees to pay Steve the full value of his motorcycle in case of an accident if he buys the company's insurance policy. The company's operating expenses are $500 per policy. What is the minimum premium that the insurance company will accept? A) $1,000 B) $2,000 C) $500 D) $1,500
All of the following components add up to the current account, except:
a. unilateral transfers. b. statistical discrepancies. c. services. d. merchandise. e. investment income.
Why do so many immigrants end up in jobs like restaurant and hotel work, lawn care, and janitorial work?
a. Immigrants prefer jobs where they can move around a lot. b. Skilled immigrants are not allowed to use those skills in the United States. c. Many immigrants over age 25 lack a high school diploma. d. Immigrants try to earn some quick cash before returning to their home countries.
The relative wage coordination argument points out that:
a. workers who are confronted with the possibility of a wage cut will worry about finding themselves worse off—both in absolute terms and relative to other workers who have seen their wages preserved. b. reducing wages for all workers during poor business conditions will cause the best workers with the best employment alternatives at other firms to leave, while the least attractive workers, with fewer employment alternatives, are more likely to stay. c. the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. d. employers will try to keep wages from falling when the economy is weak or the business is having trouble, and employees will not expect huge salary increases when the economy or the business is strong.