Assuming transaction costs are small, the Coase theorem would predict that private parties could arrive at an efficient solution for which of the following problems?
a. One neighbor doesn't mow his lawn.
b. One neighbor doesn't paint her house.
c. One neighbor comes home on his noisy motorcycle late at night.
d. All of the above are correct.
d
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Off-balance sheet activities involving guarantees of securities and back-up credit lines
A) have no impact on the risk a bank faces. B) greatly reduce the risk a bank faces. C) increase the risk a bank faces. D) slightly reduce the risk a bank faces.
Which of the following is an example of moral hazard? a. There are likely more cars of low quality than of high quality offered for sale without warranties in the used car market. b. An individual who eats well and exercises regularly chooses not to purchase health insurance
c. An individual drives less cautiously after obtaining automobile insurance. d. A car salesman offers a full warranty on a used car for 90 days.
Which of the following is an appropriate fiscal policy prescription for the government to follow?
A. Deficit reduction during a recession. B. Deficit reduction during a war. C. Deficit reduction when there is excess AD. D. Deficit expansion in an inflationary gap.
What is the real (adjusted for inflation) present value of $104.25 that you could receive one year from now, given that the rate of interest is 4.25 percent and the anticipated rate of inflation is 1 percent?
A) $99.05 B) $100.97 C) $107.64 D) $100.00