Suppose an investor equally allocates their wealth between a risk-free asset and a risky asset. If the MRS of the current allocation is less than the slope of the budget line, then the investor should:
A) shift more of their wealth to the risky asset.
B) shift more of their wealth to the risk-free asset.
C) keep the same asset allocation.
D) We do not have enough information to answer this question.
A
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The balance owed on credit cards in the United States in 2014 was $880 billion. When consumers pay off this balance in full,
A) M1 will decrease by $880 billion. B) M1 will remain unchanged but M2 will decrease by $880 billion. C) neither M1 nor M2 will change. D) M1 will increase by $880 billion.
What argument do you believe policymakers use in some states to justify exempting unprepared food from sales tax? (Hint: the income elasticity of food is less than one)
What will be an ideal response?
All of the following would be potential problems if developing nations around the world emphasized export promotion EXCEPT
A) industrial nations may be unable to absorb the exports of many newly industrializing nations. B) it would be much harder to emphasize exports under the WTO framework if the emphasis in exports requires some kind of subsidies. C) export growth may not add to GDP if it crowds out growth in output of goods for domestic consumption. D) export promotion by many countries may lead to economic conflicts. E) current research has clearly established that there is no causal connection between exports and faster economic growth.
What does it mean for a firm to be a price taker in the labor market?
What will be an ideal response?