Macroeconomics deals with:
A) bits and pieces of the economy.
B) the question of how a business unit should operate profitably.
C) the analysis of the aggregate values in the economy.
Ans: C) the analysis of the aggregate values in the economy.
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Of the following methods that banks might use to reduce moral hazard problems, the one not legally permitted in the United States is the
A) requirement that firms keep compensating balances at the banks from which they obtain their loans. B) requirement that firms place on their board of directors an officer from the bank. C) inclusion of restrictive covenants in loan contracts. D) requirement that individuals provide detailed credit histories to bank loan officers.
For a risk-neutral person, the expected utility associated with various levels of wealth
A) is above the person's utility function. B) is below the person's utility function. C) is equal to the person's utility function. D) does not exist.