In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible
in the future. This illustrates:
A. the adverse selection problem.
B. the moral hazard problem.
C. the principal-agent problem.
D. logrolling.
Answer: B
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A demand schedule shows
A. the “market potential” for a product. B. how much consumers are willing and able to buy at different prices. C. possible combinations of output under different conditions. D. how much producers would like to sell at different prices. E. All of these responses are correct.
Suppose an economy has 90,000 employed persons and 10,000 unemployed persons, the unemployment rate is
a. 11.1% b. 10.0% c. 5.6% d. 12.5% e. 9.1%
High transaction costs:
A. make spot exchange an efficient way to obtain inputs. B. may be the result of downward-sloping demand. C. may be a result of buyer opportunism. D. occur when specialized investment is not important.
The following data give the dates of successive turning points in U.S. economic activity and the corresponding levels of real GDP at the time.Turning PointDateReal GDP (1996 $ billions)(A)July 19531992.2(B)May 19541941.0(C)Apr. 19572182.7(D)Apr. 19582117.4(E)Apr. 19602391.0 The economy experienced a recession that lasted from:
A. May 1954 to April 1957. B. May 1954 to April 1958. C. July 1953 to April 1957. D. July 1953 to May 1954.