If high level of corruption in a country deters foreign investment in worthy projects, this is known as
A. foreign direct investment.
B. adverse selection.
C. dead capital investment.
D. moral hazard.
Answer: B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Most economists - both liberals and conservatives - believe a balanced budget amendment is an ill-conceived idea.
A. True B. False C. Uncertain
One fundamental idea in macroeconomics about inflation is:
A. if all wages rise, then inflation doesn't really affect anyone's purchasing power. B. when all prices rise, inflation occurs and everyone is worse off. C. keeping prices constant is the only way to ensure increasing purchasing power over time. D. if all prices decline, the purchasing power of everyone declines.
Which statement is true?
A. A pure private good can never be jointly consumed. B. The price theory we studied always considers efficient output to be the place where marginal cost equals marginal benefit, even if the good is a pure public good. C. For efficiency to be achieved in the production of a public good everyone should be taxed an amount equal to the value they place on the last unit of the good provided times the quantity of public good provided. D. All of these are true.