By providing and communicating information, the financial system
A) reduces the difference between the return on three-month U.S. Treasury bills and the return on thirty-year U.S. Treasury bonds.
B) relieves individual savers from the necessity of searching out individual borrowers.
C) eliminates the risk in investing in the stock market.
D) guarantees investors a reasonable return on their money.
B
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Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________
A) before; easy B) before; costly C) after; easy D) after; costly
Which of the following is evidence of a surplus of bananas?
A) The price of bananas is lowered in order to increase sales. B) Firms raise the price of bananas. C) The equilibrium price of bananas rises due to an increase in demand. D) The quantity of bananas demanded is greater than the quantity supplied.
When quantity supplied equals quantity demanded, there is:
a. disequilibrium b. excess quantity supplied. c. a market-clearing price (equilibrium price). d. excess quantity demanded. e. a shortage.
If China has an absolute advantage over Canada in producing both rice and tires, then
a. China should produce both rice and tire and Canada should produce both rice and tires b. there are no benefits possible to China from specialization c. Canada should produce tires and China should produce rice d. China should produce tires and Canada should produce rice e. more information is needed to tell whether China or Canada should specialize