Let S(t) denote the price of a security at time t . A popular model for the process {S(t), t .transtutors.com/qimage/image09062014494.png” alt=” width=”> 0} supposes that the price remains unchanged until a shock occurs, at which time the price is multiplied by a random factor. If we let N(t) denote the number of shocks by time t , and let Xi denote the ith multiplicative factor, then this model supposes that
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Where.transtutors.com/qimage/image09062014496.png” alt=” width=”> is equal to 1 when N(t) = 0. Suppose that the Xi are independent exponential random variables with rate ?; that {N(t), t .transtutors.com/qimage/image09062014494.png” alt=” width=”> 0} is a Poisson process with rate ?; that {N(t), t .transtutors.com/qimage/image09062014494.png” alt=” width=”> 0} is independent of the Xi ; and that S(0) = s.
(a) Find E[S(t)].
(b) Find E[S2(t)].
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A monopolist operates at the minimum point of her ATC curve A) only in the short run. B) only in the long run. C) in both the short run and the long run. D) in neither the short run nor the long run. 10. Which of the following is characteristic of a monopoly? A) The absence of political power B) Close substitute products C) The ability to make an economic profit in the long run D) Operating at peak efficiency. (I will send the image) 11. This firm will charge a price of A). $8. B) $9.65. C) $10. D) $12. E) $16 12. Statement I. Only natural monopolies are legal in the United States. Statement II. Large firms generally operate at peak efficiency. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 13. The nation's largest bank has assets over A) $2.5 billion. B) $25 billion. C) $250 billion. D) $800 billion. E) $1.8 trillion. 14. Which statement is true? A) Our money supply is fixed by law and can be raised by only a very small percentage each year. B) Our money supply is backed by gold. C) Credit cards are a form of money. D) Money makes an excellent store of value during times of inflation. E) One of the basic jobs of money is a standard of value. 15. The first bankers were A) goldsmiths. B) printers. C) storekeepers. D) innkeepers. E) blacksmiths. 16. Suppose you had no money in your checking account and your bank granted you overdraft privileges. You then went out and charged $20 on your debit card. How much would your bank charge you in fees for using your overdraft privileges? A) 0 B) $5 C) 15 D) 35 E) $50 17. Statement I: John Maynard Keynes called the hoarding of money at very low interest rates a "liquidity trap." Statement II: Since the late 1990s, Japan has been caught in a liquidity trap. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. 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Our educational standards today. A) are the highest in history. B) are much higher than they were 50 years ago. C) are the same as they were 50 years ago. D) are much lower than they were 50 years ago. 23. Brazil should be classified as a(n) A) very poor LDC. B) middle-rank LDC. C) NIC. D) industrial country. 24. The most important reason for our slow rate of productivity growth over the last three decades (of those listed below) is A) lagging business sales. B) foreign imports. C) our low savings rate. D) high tax rates. 25. Structural unemployment occurs when A) workers have quit one job and are looking for a better one. B) high school graduates enter the labor market every June. C) the business cycle is in a downturn and people are laid off. D) the people without jobs have skills that don't match the available job openings. 26. Unemployment caused by economic decline or recession is called A) frictional unemployment. B) cyclical unemployment. C) natural unemployment. 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Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. C) the interest rate declines and the number of years you wait for your money rises. D) the interest rate rises and the number of years you wait for your money declines. 37. In economics we say the amount of land is A) fixed. B) variable. C) both fixed and variable. D) neither fixed nor variable. 38. Which is not determined by supply and demand? A) The wage rate B) The interest rate C) Rent D) Profits 39. Which of the following is false? A) The supply of land is fixed. B) When the demand for a plot of land rises, its supply will rise. C) Land is most efficiently used in cities. D) The rent on a particular piece of land is based on the MRP schedule of the highest bidder. 40. If you knew that interest rates would be rising, then you would predict that the present value of $1 received 5 years from now A) would be higher. B) would be about the same. C) would be lower. D) could be higher or lower. 41. Changes in rent on a plot of land are chiefly due to A) changes in demand. 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Child poverty is A) much more of a problem in France, Germany, and Japan than it is in the U.S. B) less of a problem in the United States than in Canada, Britain, or Italy. C) more of a problem in Sweden, Denmark, and Ireland than it is in the U.S. D) much more of a problem in the U.S. than in virtually all other industrialized countries. 52. Statement I: Social Security payments help mostly the poor. Statement II: Poverty may be defined as a relative concept and as an absolute concept. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 53. Compared to their levels in 1999, the poverty line has ______ and the minimum hourly wage has ________. A) gone up; gone up B) stayed the same; stayed the same C) gone up; stayed the same D) stayed the same; gone up 54. In which year was the poverty rate the lowest? A) 1960 B) 1973 C) 1984 D) 1993 E) 2006 55. Which statement is true? 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