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Other things being equal, expected income can be used as direct measure of well-being
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- Critically explain each one of the following financial terms:i. Asymmetric informationii. Moral hazardiii. Adverse selectionGive examples in each case to illustrate your answer.Critically explain each one of the following financial terms: Asymmetric information Moral hazard Adverse selection Give examples in each case to illustrate the answer.2. Within the framework of the Rokeach value survey, what are terminal values? a.goals that individuals would like to achieve during their lifetime b.principles that guide behavior and inform us whether actions are right or wrong c. preferable ways of behaving d. convictions or beliefs that guide our decisions and evaluations of how to behave e. fixed or predetermined policies or modes of action
- Indicate whether the statement is true or false, and justify your answer.Economists agree that any intervention at time t which improves the utility of people at time t is necessarily a good intervention.A risk-loving person (select all that applies) Group of answer choices a) will never make an investment with a risk-free payoff. b) has a convex utility function of income. c) has a concave utility function of income. d) will always choose the alternative with the largest risk. e) has increasing marginal utility of income.In evaluating economic progress in reducing poverty, which is the better measure – growth in income or reduction in mortality and why? Is increasing income typically associated with an increase in well-being? Describe the mechanism that is at work?
- Which course of action will produce the highest net income? select an alternative with the highest net income Alternative 1 Alternative 2 Alternative 31- explain what would you take to compare the worthness of two different fianancial investments? how would you choose which investment is amore attractive choice? 2- explain whether there are typically differences between the past performance and the future performance of a fianincial investment ? if not why not ?You have two investments that have positive net present values and are financially feasible. Your boss wants you to make a recommendation on which one of the two to invest in given different useful lives? How do you account for this/make the decision?
- Why can we not invest net income? Explain with an example?What probable emotional reactions will have to an adverse financial outcome?4. Which of the following is the best definition of sustainable income? a. Sustainable income is a measure of solvency that does not include capital expenditure b. Sustainable income is the same as net income. c. Sustainable income is income that is unusual in nature and infrequent in occurrence. d. Sustainable income is the most likely level of income to be obtained in the future.