Which of the following statements about speculators is not true?
a. Speculators use the forward market extensively.
b. Speculators provide the foreign exchange market with liquidity
c. Speculators make foreign exchange markets more efficient.
d. Speculators cannot be completely shut out of the forward market, although the forward market is not intended for speculators.
e. Only major currencies have very liquid forward markets
.A
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Assume a company has a cafeteria where it lets all its workers eat without making them pay up front. Instead, at the end of the month the total cost of eating at the company cafeteria is added up and divided by the total number of workers
This amount is then deducted from each worker's paycheck. Explain how this practice may lead to a negative externality.
Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes?
A) No. If any of a person's decisions have poor results, that person is irrational. B) Yes, as long as Sara didn't intentionally purchase blister-causing shoes. C) No. The rationality assumption states that rational people never make mistakes. D) It's not clear because psychology, not economics, deals with the rationality assumption.