Assume a country experiences heavy capital outflows. What is the first round effect on the value of the domestic currency?
a. The value of the currency rises.
b. The value of the currency is unaffected.
c. The value of the currency falls.
d. The change in the value of the currency is ambiguous.
.C
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The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating inward and not changing its vertical intercept?
A) a decline in his preference for coffee B) a fall in the price of a gallon of gasoline C) a decrease in Sam's income D) an increase in the price of a pound of coffee
Nick has two job offers, one as a financial planner and one as an economist for a regional bank. The income that Nick would expect to earn as a financial planner depends how effective he is in getting clients
He estimates that he would receive either $80,000 and a utility of 75, with a probability of .50, or he would earn $30,000 and a utility of 35, with a probability of .50. The economist job would pay $45,000 per year and has a utility of 55. To maximize his expected utility, which job should Nick take? A) Nick is indifferent between the two jobs. B) Nick is better off if he takes the economist job. C) Nick is better off if he takes the job of financial planner. D) Nick should look around for another job.