Informational asymmetry in constructing a contract between a buyer and a seller can lead the seller to:
A. focus on ethical codes of conduct.
B. make a perfect contract.
C. improve the quality of the product.
D. lower the price of the product.
Answer: D
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A system in which money is issued by the government and its value is based uniquely on the public's faith that the currency represents command over goods and services is the
A) transactions approach. B) liquidity approach. C) fiduciary monetary system. D) transaction deposits.
Many economists argue that, in the long run, the economy self-corrects and achieves full employment. This argument is known as the:
a. natural rate hypothesis. b. incomes policy approach. c. political business cycle theory. d. Keynesian cross model.
Which of the following makes invention and entrepreneurship more likely in today's economy?
a. increasing morality of inventors b. government rules within society c. positive marginal costs d. positive marginal revenues
Between 1994 and 2004, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?
a. an increase in consumer income between 1994 and 2004 b. a reduction in the price of residential phone service, a substitute for cellular phone service c. an increase in the wages of workers in the cellular phone industry d. technological improvements that reduced the cost of supplying cellular phone service