The interest rates charged on most credit cards is:
A. lower than they should be given the problem of adverse selection.
B. high due to the problem of adverse selection.
C. high due to diseconomies of scale that exist in this market.
D. high because Visa and MasterCard have a virtual monopoly on this business.
Answer: B
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A study that deals with the salaries of university professors would be considered:
A. microeconomics B. real economics C. economic naturalism D. macroeconomics
When the Fed changes the quantity of money, there is an immediate effect on
A) the inflation rate but not the price level. B) the nominal interest rate. C) real GDP. D) the price level and the inflation rate. E) the price level but not the inflation rate.
Which statement is true?
A. College graduates earn much more than high school graduates mainly because of what they learn in college. B. The bulk of all property income goes to the middle class. C. Most government transfer payments go to the poor. D. The bulk of all property income goes to the rich.
When the Federal Reserve sells government bonds to the public, it:
A. increases the M1 money supply and increases the reserves of the commercial banking system. B. increases the M1 money supply, while reducing the reserves of the commercial banking system. C. reduces the M1 money supply, while increasing the reserves of the commercial banking system. D. reduces the M1 money supply and decreases the reserves of the commercial banking system.