There Are Two States of the World

question 62

Multiple Choice

There are two states of the world.In state one the person receives one hundred dollars.In state two the person receives fifty dollars.If the person is rational and their expected return is $87.50,then the probability with which state one occurs must be

• A) 0.25.
• B) 0.50.
• C) 0.75.
• D) 1.00.

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Definitions:

Floating Exchange Rate

An exchange rate determined by the demand for and the supply of a nation’s currency.

Gold Standard

A monetary system where a country's currency or paper money has a value directly linked to gold; countries committed to convert paper money into a fixed amount of gold upon request.

Gold Exchange Standard

A monetary system in which countries peg their currencies to a specific amount of gold but may also hold foreign currencies in reserves.

Euro

The official currency of 19 of the 27 European Union countries, which is used by over 340 million Europeans. The euro aims to facilitate a single European market, foster economic stability, and promote economic integration among its members.