Some economists develop theories concerning policy issues to
A. further their own political agendas.
B. understand what happened in an earlier time period.
C. describe current economic events.
D. make sound recommendations about policy alternatives.
E. help elect new government officials.
Answer: D
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A principal-agent problem arises when
a. only less-qualified workers apply for a job b. a firm must find a proxy for unobservable qualities needed in employees c. potential employees have more information about their own productivity than do prospective employers d. a customer knows little about the service provided by a business e. a customer knows little about the service provided by a business and is, therefore, given poor service
If the money supply in the economy were at MS3, to engage in expansionary policy the Federal Reserve Bank would use open market operation to move money supply to:
A. MS1
B. MS2
C. MS4
D. it would stay at MS3
Suppose that no externalities are generated by the production of chickens. If the price of chickens is equal to private marginal cost of producing chickens, then
a. that price is lower than the price associated with an efficient allocation of resources b. that price is higher than the price associated with an efficient allocation of resources c. that price is precisely the price associated with an efficient allocation of resources d. less than an efficient quantity is being produced e. more than an efficient quantity is being produced
Substitutes
What will be an ideal response?