This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: All of the following are assumptions made by the dynamic model of aggregate demand and aggregate ... (Read 119 times)

shenderson6

  • Hero Member
  • *****
  • Posts: 573
on: Jun 29, 2018
All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except
 
  A) the short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.
  B) aggregate demand and potential real GDP decrease continuously.
  C) potential real GDP increases continuously.
  D) the aggregate demand curve shifts to the right during most periods.

Question 2

Use the graph above to answer the following question. Suppose that Jim is in casino in Las Vegas and wins a 60,000 jackpot.
 
  The staff tells him that he can keep it or play one more game that will allow him to increase his jackpot earnings by an additional 20,000 . The game involves simply flipping a coin. If it turns up heads he earns the extra 20,000 . However, if it turns up tails he loses 20,000 of his 60,000 jackpot. Given the utility function above what is he likely to do and why?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

mochi09

  • Sr. Member
  • ****
  • Posts: 335
Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The marginal utility of the extra 20,000 is only 1 if he wins. However, the marginal utility that he loses if it comes up tails is 3 . Therefore, Jim will simply take his 60,000 and refuse to play the second game.


shenderson6

  • Member
  • Posts: 573
Reply 2 on: Jun 29, 2018
Wow, this really help

sarah_brady415

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

A cataract is a clouding of the eyes' natural lens. As we age, some clouding of the lens may occur. The first sign of a cataract is usually blurry vision. Although glasses and other visual aids may at first help a person with cataracts, surgery may become inevitable. Cataract surgery is very successful in restoring vision, and it is the most frequently performed surgery in the United States.

Did you know?

In 1864, the first barbiturate (barbituric acid) was synthesized.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Male reproductive anatomy model Male reproductive anatomy model
Many ideologies stem from older theories. The ideas of the philosophers are simplified. Ideologies Many ideologies stem from older theories. The ideas of the philosophers are simplified. Ideologies
Marcel Breuer, Armchair, Model B3. Marcel Breuer, Armchair, Model B3.
Power in the United States: The Model Proposed by C. Wright Mills Power in the United States: The Model Proposed by C. Wright Mills
A model of the 70S ribosome based upon early structural data A model of the 70S ribosome based upon early structural data
Growth in the demand for oil from the developing world Growth in the demand for oil from the developing world
Video: Chemical Synapse Animation

For a complete list of videos, visit our video library