Expected Utility Is

question 60

Multiple Choice

Expected utility is

• A)the maximum utility that a person can get from a set of possible outcomes.
• B)the probability-weighted mean of the utility gained from a set of possible outcomes.
• C)negative for risk-averse people.
• D)indeterminant for risk preferring people.

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Definitions:

Checking Account

A bank account that allows for numerous withdrawals and deposits, often used by individuals for day-to-day financial transactions.

Credit Option

An agreement that gives the buyer the right, but not the obligation, to borrow funds or extend credit under specified conditions.

M3

M3 is a measure of the money supply that includes M2 (cash, checking deposits, and easily convertible near money) plus large time deposits, institutional money market funds, and larger liquid assets.

Reserve Ratio

A regulation set by central banks determining the minimum amount of reserves that must be held by a commercial bank, expressed as a percentage of the bank's total deposits.