A trade-off typically exists between incurring a moral hazard and making an adverse selection
Indicate whether the statement is true or false
False. In fact, making an adverse selection sets up a moral hazard. Conversely, preventing an adverse selection from taking place can prevent a moral hazard as well.
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Sarah went to a store that sells used goods to buy a camera. She was looking at different models when the store manager asked her about the maximum price that she would pay
Because it was impossible to know the quality of the cameras, Sarah lowered her willingness to pay to $200, although she values a used camera of good quality at $300. If the seller values a camera of good quality at $250, what is most likely to happen in this case?
A purely financial investment that does not involve any management responsibility is referred to as _____
a. portfolio investment b. foreign direct investment c. current account trading d. open account trading
The table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.Real Domestic Output Demanded (in Billions)Price Level (Index Value)Real Domestic Output Supplied (in Billions)$3,000350$9,0004,0003008,0005,0002507,0006,0002006,0007,0001505,0008,0001004,000Refer to the above table. If the quantity of real domestic output demanded increased by $2000 at each price level, the new equilibrium price level and quantity of real domestic output would be:
A. 350 and $8000. B. 300 and $8000. C. 200 and $6000. D. 250 and $7000.
When output increases from Q1 and the price level decreases from P1, this change will:
Refer to the graph above.
A. Be caused by a shift in the aggregate supply curve from AS1 to AS2
B. Be caused by a shift in the aggregate supply curve from AS1 to AS3
C. Result in a movement along the aggregate demand curve from e1 to e2
D. Result in a movement along the aggregate demand curve from e3 to e1