4.Supose that Isabella has 100 hours per week to allocate between work and leisure and she earns 10$ per hour. If she has the utility function represented by U(Y,L) = YL (that is Y multiplied by L), where Y is the total income and L is the amount of leisure. What is Isabella optimal choice of leisure (L*) is her non-labour income is zero.

A) L* = 40 hours

B) L* = 45 hours

C) L* = 55 hours

D) L* = 50 hours

5. Which of the following items is not a tool used to solve adverse selection problems?

A) Selection of finance indicators monthly

B) Government regulation to increase information

C) Collateral

D) Financial intermediation

6.Bell Canada is considering selling bonds on the open market to pay for infrastructure investment. If the probability if a bond default decreases because Bell Canada experiences significant profit, then the default risk on the bond will _____ and the expected return on theses bond will _____. Everything else held constant.

A) decrease ; increase

B) increase ; decrease

C) increase ; increase

D) decrease; increase