The theory that profits are a reward for taking risks was formulated by __________.

Fill in the blank(s) with the appropriate word(s).


Frank Knight

Economics

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If the expected inflation rate was 2.5%, the expected real interest rate was 4.0%, and the real interest rate turned out to be 5.1%, then the nominal interest rate equals

A) 1.4%. B) 1.5%. C) 2.6%. D) 6.5%.

Economics

When attempting to build a shopping center the size of several city blocks a developer anticipates a holdout problem in his preferred location. Which of the following is not an option the developer has available to get around the holdout problem?

a. Substituting to another location by building the shopping center on former farmland on the urban fringe. b. Lobbying the local government to use eminent domain on potential holdouts. c. Attempting to purchase the properties through dummy corporations to hide his true intent. d. Using contracts that increase everyone's sale price by a small percentage if everyone sells.

Economics

You are the mayor of your home town, and one day you arrive at city hall to find angry voters demonstrating against you. They are mad because your office created a garbage-collection monopoly by awarding only one company a permit to collect garbage in

your town. The voters claim that the company is overcharging and providing poor service. They want you to do something that will lower rates and improve service. You call your staff economist, who presents evidence that there are substantial increasing economies of scale to garbage collection. What are your options if you are interested in efficiency?

Economics

Answer the following statement(s) true (T) or false (F)

1.The tax cuts made by Presidents Johnson and Reagan both led to a decline in economic growth. 2.Over time, any permanent change in government purchases must be fully offset by a change in private expenditure. 3.The time span before enough data are gathered to indicate the actual presence of a downturn is known as the recognition lag. 4.Unemployment insurance is the most important automatic stabilizer. 5.Changes in government transfer payments or tax collections that automatically tend to counter business cycle fluctuations are known as discretionary policies.

Economics