Which of the following is a reason to think that government action may not be valuable to improve market outcomes with asymmetric information?
a. The private market can sometimes deal with information asymmetries using signaling and screening.
b. The government rarely has more information than the private parties.
c. Government actions have their own imperfections.
d. All of the above are correct.
d
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The 45-degree line splitting the distance between the axes in a Lorenz Curve is the:
a. line of equal share of expenditure. b. line of equivalent income. c. line of income equality. d. line of average income. e. line of absolute inequality.
Real GDP per person tells us the income and expenditure of the average person in the economy
a. True b. False Indicate whether the statement is true or false
In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community,
A. water production is characterized by increasing opportunity costs. B. markets cannot reach equilibrium because there is a persistent shortage of water. C. the supply of water is perfectly inelastic because it is a finite resource. D. higher water prices can reduce quantity demanded but cannot increase quantity supplied.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.