The problem of asymmetric information that brings about a general decline in product quality in an industry is
A. the lemons problem.
B. a market failure.
C. the result of government regulation.
D. creative response.
Answer: A
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If demand increases and supply decreases, what is the effect on equilibrium price and equilibrium quantity?
A) The price falls and the quantity might increase, decrease, or remain the same. B) The price rises and the quantity might increase, decrease or remain the same. C) The quantity decreases and the price might rise, fall, or remain the same. D) The quantity increases and the price might rise, fall, or remain the same.
How does a decrease in the federal budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?
A) The demand for dollars falls, and the supply of dollars falls. B) The demand for dollars rises, and the supply of dollars falls. C) The demand for dollars rises, and the supply of dollars rises. D) The demand for dollars falls, and the supply of dollars rises.
The aggregate demand curve is negatively sloped because a lower price level
A) reduces the real money supply. B) increases the real money supply. C) reduces aggregate income. D) increases aggregate income.
The greater the magnitude of the external costs of production, a. The larger is the deadweight loss from overproduction
b. The greater would be the optimal pollution tax. c. The further the private market solution ignoring those costs would deviate from the socially efficient level of output. d. All of the above are true.