Transfer payments include:
a. government spending on tanks and planes.
b. government spending on national forests and parks.
c. the salaries of senators and federal judges.
d. welfare benefits and Social Security payments.
d. welfare benefits and Social Security payments.
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The national economic forecast for the next two years prepared by the staff of the Board of Governors is published in the
A) green book. B) beige book. C) blue book. D) Fed book.
An individual has preferences consistent with prospect theory. The person takes their current wealth of $10,000 (plus any certain additions) as their reference point. Gains above this reference point are worth +1 util. Losses below this reference point are worth -2 utils. The person is faced with two choice problems. The first involves a choice between (A) no gamble and (B) a gamble with an equal
chance of winning $1,800 and losing $1,000 . The second choice problem, the person first has $1,000 taken away (resulting in the adjustment of the reference point). The choice is then between (C) being given back $1,000 for sure and (D) an equal chance of winning $2,800 or nothing. What choices would the person make? a. A and C. b. A and D. c. B and C. d. B and D.