What type of risk behavior does the person exhibit who is willing to pay $5 for the chance to bet $60 on a game where 20% of the time the bet returns $100, and 80% of the time returns $50? Explain
What will be an ideal response?
This person is risk preferring. The bet is fair. The expected wealth of the person is the same whether or not the bet is made. However, this person is willing to pay $5 to make this fair bet.
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Suppose the proportion of deposits that individuals wish to hold as cash were to rise from 5% to 10%. Then,
A) the money supply will rise because people have more cash. B) bank deposits will fall by the same amount as if the reserve-holding ratio had risen by 5 percentage points. C) the supply of high-powered money will rise because cash has risen. D) the money supply will change by the same amount as if the reserve-holding ratio had risen by 5 percentage points.
Democracy tends to best promote freedom when there is
a. unrestrained executive and legislative majority power. b. constitutional protection of private property rights. c. a large and centralized government sector. d. all of the above.