When banks and other financial institutions become insolvent, ________
A) the problem of asymmetric information becomes more acute
B) it is easier to distinguish the good creditors and borrowers from the bad
C) surviving creditors will attract borrower-spenders by lowering the real interest rate
D) the resulting increase in short-run aggregate supply will discourage investment
A
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Trade without serious income distribution effects is most likely to happen
A) in sophisticated manufactures trade between rich countries. B) in simple manufactures trade between developing countries. C) in sophisticated manufactures trade between rich and poor countries. D) in agricultural trade between rich countries. E) in labor-intensive industries like clothing.
I purchase a 10 percent coupon bond. Based on my purchase price, I calculate a yield to maturity of 8 percent. If I hold this bond to maturity, then my return on this asset is
A) 10 percent. B) 8 percent. C) 12 percent. D) there is not enough information to determine the return.
An increase in unearned income always creates a disincentive to work
Indicate whether the statement is true or false
If the mangers of Special Cakes, a large bakery, acquire an egg farm to produce the eggs for their cakes, the managers of Special Cakes are likely to experience all of the following except which one?
A) an increase in their required areas of expertise B) an increase in managerial diseconomies C) a decrease in managerial diseconomies D) an increase in the complexity of coordination of Special Cakes