Section 1: True/False, if false, explain (15 points). Each question is worth 3 points. 1. An increase in non labor income due to a rise in the value of stocks and bonds will cause both an income and a substitution effect. 2. Present-oriented people discount future earnings at a higher rate than forward-looking people. 3. Workers with relatively high levels of natural ability are quite likely to attend college. This can cause a downward bias when estimating educational returns because other benefits from college are ignored. 4. In the labor market, signals are any personal characteristic viewed as an indicator of productivity. 5. An increase in the average age of workers would cause quit rates to decline.

Profits from using currency options and futures.on july 2, the two-month futures rate of the mexican peso contained a 2 percent discount (unannualized). there was a call option on pesos with an exercise price that was equal to the spot rate. there was also a put option on pesos with an exercise price equal to the spot rate. the premium on each of these options was 3 percent of the spot rate at that time. on september 2, the option expired. go to the oanda.com website (or any site that has foreign exchange rate quotations) and determine the direct quote of the mexican peso. you exercised the option on this date if it was feasible to do so. a. what was your net profit per unit if you had purchased the call option? b. what was your net profit per unit if you had purchased the put option? c. what was your net profit per unit if you had purchased a futures contract on july 2 that had a settlement date of september 2? d. what was your net profit per unit if you sold a futures contract on july 2 that had a settlement date of september 2

An economic theory that calls for workers to take control of factories is .

Robert owns a life insurance policy that he purchased when he first graduated college. it has a $100,000 death benefit and robert pays premiums for it every month out of his checking account. the insurance robert has is most likely da. permanent life insurance o b. term life insurance o c. group life insurance o d. individual life insurance