Two Slot Machines Offer to Double Your Money 3 Times

question 103

Multiple Choice

Two slot machines offer to double your money 3 times out of 5.Machine A takes $10 bets and Machine B takes $100 bets on each occasion.A risk-averse investor prefers to bet on:

• A)machine A
• B)machine B
• C)does not matter
• D)none of the above

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Definitions:

Budget Surpluses

An excess of income or revenues over expenditures in a given period, meaning the government or organization has more money than it spends.

Automatic Stabilizer

An Automatic Stabilizer is an economic policy or program designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers, such as progressive taxes and welfare.

Unemployment Compensation

Financial payments made by the government to unemployed individuals who are actively seeking work but have not found employment.

Social Security Taxes

Taxes collected by governments to fund social security programs, including retirement benefits, disability insurance, and survivor benefits.