Questions from General Economics

Q: Draw the indifference curve for someone deciding how to allocate time between

Draw the indifference curve for someone deciding how to allocate time between work and leisure. Suppose the wage increases. Is it possible that the person’s consumption would fall? Is this plausible?...

Q: What is the role of the financial system? Name and describe

What is the role of the financial system? Name and describe two markets that are part of the financial system in the U.S. economy. Name and describe two financial intermediaries.

Q: Why is it important for people who own stocks and bonds to

Why is it important for people who own stocks and bonds to diversify their holdings? What type of financial institution makes diversification easier?

Q: What is national saving? What is private saving? What is

What is national saving? What is private saving? What is public saving? How are these three variables related?

Q: Define private saving, public saving, national saving, and investment

Define private saving, public saving, national saving, and investment. How are they related?

Q: If more Americans adopted a “live for today” approach to

If more Americans adopted a “live for today” approach to life, how would this affect saving, investment, and the interest rate?

Q: What is stock? What is a bond? How are they

What is stock? What is a bond? How are they different? How are they similar?

Q: For each of the following kinds of insurance, give an example

For each of the following kinds of insurance, give an example of behavior that can be called moral hazard and another example of behavior that can be called adverse selection. a. health insurance b. c...

Q: Which kind of stock would you expect to pay the higher average

Which kind of stock would you expect to pay the higher average return: stock in an industry that is very sensitive to economic conditions (such as an automaker) or stock in an industry that is relativ...

Q: When company executives buy and sell stock based on private information they

When company executives buy and sell stock based on private information they obtain as part of their jobs, they are engaged in insider trading. a. Give an example of inside information that might be u...