The potential for a decline in product quality due to asymmetric information is commonly referred to as
A) the lemons problem.
B) planned obsolescence.
C) diminishing marginal product.
D) the externality problem.
Answer: A
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A ______ market is one in which a number of buyers and sellers are offering similar products, and no single buyer or seller can influence the market price.
a. bullish b. command c. competitive d. regulated
A lender expects to earn a real interest rate of 4.5% over the next 12 months. She charges a 9.25% (annual) nominal rate for a 12-month loan. What inflation rate is she expecting? If the lender is in a 30% marginal tax bracket, the borrower in a 25% marginal tax bracket, and they both have the same inflation expectations, what are the real after-tax rates each expects?
What will be an ideal response?
Even when people know the purchasing power of the currency is declining, they continue to use the currency because
A. its value is still predictable. B. it still has some intrinsic value. C. the return of holding currency is always higher than the returns of all other assets. D. they have no other choice.
An externality is
A. a problem intrinsic to public goods: The good or service is so costly that its provision generally does not depend on whether or not any single person pays. B. the amount a consumer pays to consume an additional amount of a particular good. C. the total cost to society of producing an additional unit of a good or service. D. a cost or benefit resulting from some activity or transaction that is imposed or bestowed on parties outside the activity or transaction.