ba 3300 quiz #1

Question 1

The elasticity of labor supply – i.e., the percent change of labor supplied due to a percent change in wages – tends to be:

a.	Between -1 and 0.

b.	Between 0 and 1.

c.	Between 1 and 5.

Answer 1

b. Between 0 and 1

Question 2

A company in the US invests in developing new computer software. How will this affect the US GDP?

a.	 increase

b.	 decrease

c.	 no effect

Answer 2

a.
increase

Question 3

Loss aversion describes the tendency of humans…

a.	 to try to avoid losses at all costs.

b.	 to be competitive.

c.	 to find it more important to avoid a loss than to realize an equally sized gain.

Answer 3

a.
to try to avoid losses at all costs.

Question 4

Save More Tomorrow is an example of nudging. The idea is to increase people’s contributions to their retirement fund by…

a.	 forcing employees to increase their contribution rates when they get a pay raise.

b.	 matching an employee's contributions to provide better incentives.

c.	 using insights of behavioral economics to induce people to voluntarily increase their contribution rates when they get a pay raise.

d.	 forcing firms to match employee contributions to reduce inequality.

Answer 4

c.
using insights of behavioral economics to induce people to voluntarily increase their contribution rates when they get a pay raise.