Because of the problems of adverse selection and moral hazard, it has been suggested that the World Bank and International Monetary Fund
A. not make loans to risky nations because there is a high demand for funds from safer nations.
B. impose tougher preconditions on borrowers.
C. make loans to the riskiest nations so that private investors will not be tempted to take a risk.
D. loan only to countries that have free elections.
Answer: B
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The wealth effect on consumer spending is
A) about the same as the effect on plant and equipment expenditure. B) about the same as the effect on residential construction. C) less than the effect on plant and equipment expenditure. D) larger than the effect on residential construction.
When consumers value present consumption more than future consumption:
a. they are willing to pay more to consume now rather than wait. b. they must be rewarded to consume now rather than wait. c. they are said to have a negative rate of time preference. d. they are patient and certain.
Learning curve: Shift down of ____ curve
Fill in the blank(s) with the appropriate word(s).
Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B