You Are a Hotel Manager Considering Four Projects That Yield

question 109

Multiple Choice

You are a hotel manager considering four projects that yield different payoffs,depending upon whether there is an economic boom or a recession.The potential payoffs and corresponding payoffs are summarized in the following table. $$\begin{array} { | l | l | l | } \hline \text { Praject } & \begin{array} { l } \text { Bamn } \\( 50 \% ) \end{array} & \begin{array} { l } \text { Recession } \\( 50 \% ) \end{array} \\\hline \text { A } & \$ 40 & - \$ 20 \\\hline \text { B } & - \$ 10 & \$ 30 \\\hline \text { C } & \$ 50 & - \$ 50 \\\hline \text { D } & \$ 60 & \$ 60 \\\hline\end{array}$$ Which of the following statements is true?

• A)A risk-neutral manager will prefer project D.
• B)A risk-averse manager will prefer project D.
• C)A risk-loving manager will prefer project D.
• D)All of the statements are correct.

Identify the effects of exchange rate changes on a country's trade balance and balance of payments.

Understand the intervention strategies central banks use to influence exchange rates in a managed float system.

Analyze how economic policies can affect international capital flows and their impact on exchange rates.

Examine the consequences of trade deficits and surpluses on a nation's economy.

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Definitions:

Shandong

A coastal province of Eastern China known for its significant historical and cultural sites.

Pacific Islands

The geographic region consisting of thousands of islands within the Pacific Ocean, including Melanesia, Micronesia, and Polynesia.

Germans

Refers to the people native to Germany or holding citizenship of Germany.

Japan

An island country in East Asia known for its rich cultural heritage, technological advancements, and significant economic development post-World War II.