A. None of these answers are true
B. All of these answers are true
C. They dislike bad things more than the like comparable good things
D. The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
Their utility function exhibit the property of diminishing marginal utility of wealth
Related Mcqs:
- The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?
A. approximately one-half
B. smaller than
C. larger than
D. approximately equal to - Which of the following does not help reduce the risk that people face ?
A. increasing the rate of return within their portfolio
B. diversifying their portfolio
C. All of these answers help reduce risk
D. buying insurance - Idiosyncratic risk is the ?
A. uncertainty associated with the entire economy
B. uncertainty associated with specific companies
C. risk associated with adverse selection
D. risk associated with moral hazard - Which of the following reduces risk in a portfolio the greatest ?
A. Increasing the number of shares from 10 to 20
B. All of these answers provide the same amount of risk reduction
C. Increasing the number of shares in the portfolio from 1 to 10
D. Increasing the number of shares from 20 to 30 - When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have seen a demonstration of ?
A. The multiplier effects
B. supply side economics
C. None of these answers
D. The crowding out effect - Because people’s income vary other the life cycle and because there are transitory shocks to people’s incomes the standard measures of income distribution ?
A. exaggerate the inequality of living standards
B. could exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative
C. understate the inequality of living standards
D. accurately represent the true inequality of living standards - Credit risk refers to a bond’s ?
A. Probability of default
B. Price-earnings ratio
C. dividend
D. tax treatment - In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of ?
A. moral hazard
B. risk aversion
C. adverse selection
D. a poor gamble - The reduction or covering of foreign exchange risk is called ?
A. hedging
B. speculation
C. intervention
D. arbitrage - People are said to have rational expectations if they ?
A. assume that this year’s inflation rate will be the same as last year’s inflation rate
B. merely guess at the inflation rate.
C. assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years
D. Use all available information in forming their expectations.
