Which of the following is FALSE with respect to regulation?
A. Regulation has resulted in state laws that have made creative response illegal in many states.
B. Regulated firms commonly try to avoid the effects of regulation whenever they can.
C. Firms engage in creative responses which conform to the letter of the law but undermine its spirit.
D. Recent regulations have generated feedback effects that undermined the key aim of the rules.
Answer: A
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Which of the following actions best illustrates moral hazard?
a. A person adds risky stock to his portfolio. b. A person who has narrowly avoided many accidents applies for automobile insurance. c. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10. d. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
A firm is operating such that the marginal product of labor is 48 and the marginal product of capital is 12. The firm is minimizing its costs only if
A. since capital is more productive than labor, the firm must be minimizing cost. B. the rental rate is one fourth the wage. C. the wage is one fourth the rental rate. D. Given this information the firm can't be minimizing cost under any circumstances.
Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to
A) $500. B) $800. C) $640. D) $625. E) $200.
A decrease in aggregate demand causes a decrease in ________ only in the short run, but causes a decrease in ________ in both the short run and the long run
A) the price level; real GDP B) the price level; the price level C) real GDP; real GDP D) real GDP; the price level