What is asymmetric information?
What will be an ideal response?
Asymmetric information occurs when one party to an economic transaction has less information than the other party.
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Explain the concept of marginalism as it is used in economics
What will be an ideal response?
If the annual interest rate is 4 percent, a consumer who spends $100 today
a. will have to pay back $104 to the bank b. would have to pay $104 next year to get the same goods c. will receive $96 from the bank next year d. would have to pay $96 next year to get the same goods e. is giving up the ability to spend $104 on goods next year
In order to use inflation targeting, a central bank must:
a. be independent of fiscal policy. b. be dependent on fiscal policy. c. focus on money supply. d. focus on unemployment. e. focus on stable exchange rates.
Which of the following best describes a cartel?
a. A group of cooperating oligopolists that jointly reduce output and raise price in imitation of a monopolist. When entry is very costly, these high prices can persist. b. A group of monopolistically competitive firms that jointly reduce output and raise price in imitation of a monopolist. When entry is very costly, these high prices can persist. c. A monopolist that reduces output and raises price. When entry is very costly, these high prices can persist. d. A group of identical non-cooperative oligopolists that is able to reproduce a monopoly equilibrium through price rivalry.