When a professor announces to the class that she will grade on a curve and that no one in the class will receive a grade lower than a "C"
A. a moral hazard problem for her students will likely arise.
B. an adverse selection problem for her students will likely arise.
C. the marginal social benefit will exceed the marginal social cost.
D. the marginal social cost will exceed the marginal social benefit.
Answer: A
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A period of stagflation is part of the normal aftermath of a period of excessive aggregate demand.
Answer the following statement true (T) or false (F)
For the average American, innovation has led to:
a. an average income that is below many countries because of monies spent on R&D b. an average income that is not paralleled anywhere in the world c. an average income that exceeds that of all but the richest countries d. None of the above is correct.
According to Baumol and Blinder, from the demand side, an increase in the price level causes aggregate expenditures to
A. fall, resulting in a lower level of equilibrium income. B. fall, resulting in a higher level of equilibrium income. C. rise, resulting in a higher level of equilibrium income. D. rise, resulting in a lower level of equilibrium income.
________ states that if previously existing distortions exist, a distortionary tax may actually improve efficiency.
A. The principle of second best B. The principle of neutrality C. The rule of reverse distortion D. The benefits-received principle