For the utility function U = Wa, what values of "a" correspond to being risk averse, risk neutral, and risk loving?
What will be an ideal response?
0 < a < 1 implies risk averse.
a = 1 implies risk neutral.
a > 1 implies risk loving.
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The problem of scarcity means that people face trade-offs. Which of the following trade-offs are the concern of microeconomics?
A. Trade-offs faced by firms in what goods to produce B. Trade-offs faced by consumers in the purchase of goods C. Trade-offs faced by workers between work and leisure D. all of the above
Under pressure from Japan, the United States, and Europe, China announced it switched from pegging the yuan against the dollar to linking the value of the yuan to a 'basket' of currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar. B) the value of the yuan has increased dramatically and is beginning to remove the trade imbalance between the United States and China. C) the value of the yuan has become very responsive to changes in demand and supply in the foreign currency market. D) the value of the yuan has decreased dramatically and has further spurred Chinese exports.