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A gamble gives 25% probability of R50, 50% probability of R100 and 25% probability of nothing. A risk neutral (U(x)=x) RDU decision maker has probability weighting function: w(p)=p^1.5. Whatprobability weight would she use for the R50 outcome?
a. ~0.25
b. ~0.125
c. ~0.30
d. ~0.5
A decision maker has utility function 2lnW. What can we conclude about her relative risk aversion?
a.she has decreasing relative risk aversion
b.she has constant relative risk aversion
C.she has increasing relative risk aversion
Suppose that instead of cooking dinner for an hour, you decide to work an extra hour, earning an additional $15.
You then purchase some (takeout) Chinese food, which costs you $10.
a. By how much does measured GDP increase?
Although the economy was in the Great Depression, the Hoover administration followed a fiscal policy of balancing the budget. A Keynesian would have found this policy
A. inappropriate, because it probably would have inflationary
consequences that might serve to further the people's
reluctance to hold money.
B. appropriate, because it probably would have led to a significant increase in the money supply and thereby increased employment.
C. appropriate, because it probably would have stimulated economic activity and helped end the depression.
D. appropriate, because a balanced budget is always appropriate.
E. inappropriate, because it probably would further depress
aggregate demand, economic activity, and employment.
Which of the following is/are correct?
(X).Your spouse cleans your house every Thursday.
(Y).You sell your old economics book for $25.
(Z).Your economic textbook is revised and you buy a new edition.
A. All three events increase GDP.
B. Only (X) increases GDP
C.Only (Y) increases GDP
D. Only (Z) increases GDP
E. (X) and (Y) increase GDP, (Z) reduces GDP
On day 1, it cost $.7354 U.S. to buy one Canadian dollar. How many Canadian dollars would $1 U.S. buy?
A. 1.36 B. 1.27 C. 1.11 D. 0.84 E. 0.73
- If a commercial bank holds 20% as required reserves, the initial deposit is ksh 10,000, what was the money created by the bank from this initial deposit?
If
Consumption function C= 100+ 0.5Yd
TaxT= 100
InvestmentI= 200
ExportX= 120
Government Expenditure G= 150
ImportM= 0.03Y
Find the following:
- The equilibrium level of income.
- The next exports.
Consider the following data on U.S. GDP:
a. What was the growth rate of nominal GDP between 1994 and 2014? (Hint: The growth rate of a variable X over an N-year period is calculated as 100 ].)
b. What was the growth rate of the GDP deflator between 1994 and 2014?
c. What was real GDP in 1994 measured in 2009 prices?
d. What was real GDP in 2014 measured in 2009 prices?
e. What was the growth rate of real GDP between 1994 and 2014?
f. Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.
Louis and Carrie Anne are students who have set up a summer business in their neighborhood. They cut lawns and clean cars. Louis is particularly efficient at cutting the grasshe requires 1 and 1/4 hours to cut a typical lawn, while Carrie Anne needs 1 and 2/3 hours. In contrast, Carrie Anne can wash a car in 3/4 hour, while Louis requires 1 hour. (a) If they decide to specialize in the tasks, who should cut the grass and who should wash cars? (b) If they each work a ten hour day, how many lawns can they cut and how many cars can they wash if they each specialize in performing the task where they are most efficient? (c) Illustrate the PPF for each individual where lawns are on the horizontal axis and car washes on the vertical axis, if each individual has twelve hours in a day.
