If, after she buys a car with air bags, Maria Andretti starts to drive recklessly, that would be an illustration of:
a. the moral hazard problem
b. the free rider problem.
c. the adverse selection problem.
d. the "lemon" problem.
a
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In the long run, holding all else constant, inflation requires a decrease in the money supply relative to the output of goods and services—not enough money chasing too many goods
Indicate whether the statement is true or false
Suppose the U.S. government has an annual budget of about $3.03 trillion. Does the U.S. government face the problem of scarcity?
a. No, a government with $3.03 trillion faces no real constraints. b. No, scarcity does not apply to governments. c. Yes, resources are limited even for the U.S. government. d. Yes, although the U.S. government can easily obtain more resources. e. Uncertain-economic theory has no answer to this question.
A basic assumption used in most economic theories is that:
A. as price decreases, quantity demanded will decrease. B. whatever goes up must come down. C. what is true for a part of the whole must also be true for the whole. D. all other things remain the same.
The economy of Appleland is experiencing a recession. In the figure given below, AD represents aggregate demand and AS represents aggregate supply in Appleland.
As a result of the austerity, policy
A. the AS curve shifts to AS'. B. the AD curve shifts to AD'. C. the AD curve shifts to AD''. D. the AS curve shifts to AS''.