Which of the following will most likely have the greatest effect on an individual's consumption function?
a. winning a small amount in the lottery
b. a one-time tuition grant
c. a week of high overtime pay
d. an inheritance paying a modest annual dividend
d
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One of the tools of monetary policy is to change the discount rate. Since 2003
A) the Fed has not changed the discount rate. B) the Fed has pegged the discount rate to the reserve requirement. C) the Fed has kept the discount rate a fixed amount above the federal funds rate. D) the Fed has kept the federal funds rate one percentage point above the discount rate.
The situation where politicians make decisions that will raise their chances of reelection, even if those decisions are detrimental to the general public, is referred to as the:
A. Moral hazard problem B. Principal-agent problem C. Adverse selection problem D. Common good problem