EP 2024 True/False Questions After Chapter 10 PDF

True/False Questions 1. Intertemporal choice involves decisions over time. (True/False) 2. The nominal interest rate adjusts for inflation. (True/False) 3. Present value format of budget constraint is the same as future value format. (True/False) 4. Co...

True/False Questions 1. Intertemporal choice involves decisions over time. (True/False) 2. The nominal interest rate adjusts for inflation. (True/False) 3. Present value format of budget constraint is the same as future value format. (True/False) 4. Consumption smoothing relates to balancing consumption over different periods. (True/False) 5. The real interest rate does not account for inflation. (True/False) 6. Expected utility is a concept related to decision under uncertainty. (True/False) 7. Risk aversion means preferring certain outcomes over uncertain ones with the same expected return. (T 8. Von Neumann-Morgenstern utility function is used to measure expected utility. (True/False) 9. Idiosyncratic risk is unique to an individual or a small group. (True/False) 10. Systematic risk can be eliminated through diversification. (True/False) 11. Adverse selection occurs when one party has more information than the other. (True/False) 12. Moral hazard is the risk that one party will take risks because they do not bear the full consequences. (T 13. Pooling equilibrium in insurance markets results in different premiums for different risk groups. (True/Fa 14. Sequential games are analyzed using forward induction. (True/False) 15. Incentives do not affect moral hazard in financial markets. (True/False) 16. Credit rationing can occur due to information asymmetry. (True/False) 17. Capital requirements for banks are meant to reduce risk. (True/False) 18. Time inconsistency relates to changing preferences over time. (True/False) 19. Sticky wages can lead to unemployment. (True/False) 20. The Philips curve illustrates the trade-off between unemployment and inflation. (True/False) 21. Central bank independence can help control inflation. (True/False) 22. Dynamic inefficiency occurs when savings exceed what is needed for investment. (True/False) 23. The Solow Growth Model explains long-term economic growth based on capital accumulation, labor, an 24. Comparative advantage means producing goods at a lower opportunity cost than others. (True/False) 25. Absolute advantage is the same as comparative advantage. (True/False) 26. Autarky refers to economic independence or self-sufficiency. (True/False) 27. Specialization leads to gains from trade. (True/False) 28. Free international trade always benefits all countries equally. (True/False) 29. Public goods are characterized by non-excludability and non-rivalry. (True/False) 30. The free rider problem occurs when people can benefit from resources without paying for them. (True/F 31. Lump sum taxes are considered efficient because they do not alter economic behavior. (True/False) 32. Income taxes are more efficient than lump sum taxes. (True/False) 33. Rational expectations suggest that individuals make decisions based on all available information. (True 34. Government loss functions typically consider both inflation and unemployment. (True/False) 35. Technological progress can shift the production possibility frontier outward. (True/False) 36. Increasing returns to scale can lead to specialization and trade. (True/False) 37. The Laffer Curve shows the relationship between tax rates and tax revenue. (True/False) 38. Moral hazard in banking can lead to riskier behavior by banks. (True/False) 39. Capital requirements for banks are designed to reduce the risk of moral hazard. (True/False) 40. Adverse selection in insurance markets can lead to market failure. (True/False) 41. Comparative advantage is the ability of a country to produce a good at a lower opportunity cost than an 42. Risk neutrality means being indifferent between certain and uncertain outcomes with the same expecte 43. The Golden Rule level of capital is the level of capital that maximizes steady-state consumption. (True/F 44. Borrowing and lending can be analyzed using the Edgeworth Box. (True/False) 45. Consumption smoothing refers to maintaining a stable level of consumption over time. (True/False) 46. The Philips curve shows a positive relationship between inflation and unemployment. (True/False) 47. Expected utility theory helps in making decisions under uncertainty. (True/False) 48. Insurance allows for the diversification of idiosyncratic risk. (True/False) 49. Sequential games involve players making decisions one after another. (True/False) 50. The natural rate of unemployment is the level of unemployment expected in an economy without cyclica 51. Sticky wages refer to wages that adjust quickly to changes in labor market conditions. (True/False) 52. Dynamic inefficiency can result in over-accumulation of capital. (True/False) 53. Rational expectations assume that people use all available information to forecast future economic vari 54. Comparative advantage and absolute advantage are the same concepts. (True/False) 55. The Solow Growth Model includes technological progress as a factor for long-term growth. (True/False) 56. Intertemporal choice involves decisions that affect multiple time periods. (True/False) 57. Present value calculations discount future cash flows to their value today. (True/False) 58. The cap-and-trade system for CO2 emissions is an example of a market-based environmental regulatio 59. A separating equilibrium in insurance markets means that different risk types are charged different prem 60. Moral hazard can occur when individuals change their behavior because they are insured. (True/False) 61. The central bank's loss function typically includes terms for inflation and output. (True/False) 62. Time inconsistency refers to the tendency to change plans because of a shift in preferences over time. 63. Sticky wages can lead to prolonged periods of unemployment. (True/False)