The sale of a used automobile would not be included in GDP of the current year because it is
A. Nonmarket transaction
B. Nonproduction transaction
C. Purely financial transaction
D. Private transfer payment
B. Nonproduction transaction
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An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. proofing. B. building a reputation. C. disclosure laws. D. mandating that information be shared
Suppose that Linda's parents offer her a choice of presents for her graduation: $500 today to buy herself a bike, or $500 two years from now. If Linda has a positive rate of time preference, which would she prefer, and why?
a. $500 today is preferred to $500 two years from now because Linda values present consumption more than future consumption. b. $500 two years from now is preferred to $500 today because Linda knows her parents will give her more than $500 after two years. c. $500 two years from now is preferred to $500 today because Linda values future consumption more than present consumption. d. $500 today is preferred to $500 two years from now because Linda plans to invest the money and earn higher returns after two years.
The net benefits a nation receives from free trade are called the costs of trade.
a. true b. false
Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 ? 2.5P and Qs = ? 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. What would be the resulting market distortion?
A. Surplus of 120 tons of fish B. Surplus of 175 tons of fish C. Shortage of 175 tons of fish D. Shortage of 120 tons of fish