An increase in the price of product A will:
A. reduce the demand for resources used in the production of A.
B. increase the demand for complementary product C.
C. increase the demand for substitute product B.
D. reduce the demand for substitute product B.
Answer: C
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An example of an international policy externality is
A) the locomotive effect. B) the liquidity effect. C) the monetary effect. D) sterilization.
What is the most important factor for Federal Reserve currency to be accepted as money?
A) its acceptance by businesses and households in the United States in exchange for goods and services B) its designation as legal tender by the federal government C) the willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins D) the willingness of foreign businesses and banks to accept it in exchange for goods and services
Answer the following statements true (T) or false (F)
1. Collateral means something valuable—often property or equipment—that a lender would have a right to seize and sell if the loan is not repaid. 2. Insurance companies price their premiums based on what each customer can afford to pay. 3. Adverse selection is a type of asymmetric information in which the seller has more information than the buyer, making it hard for the buyer to know how much to pay. 4. In many cases of asymmetric information, the seller has more information than the buyer. When the buyer has more information, the problem is known as “adverse selection.” 5. Firms can raise the financial capital they need in four main ways: (1) from early-stage investors; (2) by reinvesting profits; (3) by borrowing through banks or bonds; and (4) by selling stock.
Congressional repeal of an executive action taken in the course of administering a law is known as a
a. line-item veto. b. legislative veto. c. discretionary veto. d. political veto.