The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that
A) the money market is in equilibrium.
B) people buy bonds and the interest rate falls.
C) people sell bonds and the interest rate falls.
D) bond prices fall and so the interest rate falls.
B
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A risk-averse individual prefers
A) the utility of expected income of a risky gamble to the expected utility of income of the same risky gamble. B) the expected utility of income of a risky gamble to the utility of expected income of the same risky gamble. C) outcomes with 50-50 odds to those with more divergent probabilities, no matter what the dollar outcomes. D) outcomes with higher probabilities assigned to more favorable outcomes, no matter what the outcomes are. E) outcomes with highly divergent probabilities so that one of the outcomes is almost certain.
Generally, investors expect that projects with high expected net present values also will be projects with
a. low risk b. high risk c. certain cash flows d. short lives e. none of the above