The gambler's fallacy suggests that what happened in the past will influence the present. This is most likely true in which of the following situations?
A) flipping cards from a single deck
B) tossing a fair coin
C) the quality of play of a baseball team
D) horse racing
B
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In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of a fall in the nominal interest rate?
A) The demand for money curve would shift rightward to MD2. B) The demand for money curve would shift leftward to MD0. C) There would be a movement upward along the demand for money curve MD1. D) There would be a movement downward along the demand for money curve MD1.
Which of the following would make a reasonable hypothesis to test?
A) Rising inflation is bad for the U.S. economy. B) An inflation rate above 4% is dangerous for the British economy. C) As interest rates increase, eventually the inflation rate will decline. D) Increases in inflation are worse for the U.S. economy than are increases in public sector borrowing.