One lesson that Akerlof's Lemons model provides is:
A. that for high quality providers to survive they must provide a way that customers can distinguish high quality from low quality.
B. low quality will not survive in a market.
C. moral hazard is unavoidable.
D. people always prefer high quality to low quality goods.
Answer: A
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Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________
A) equals potential GDP B) equals full-employment GDP C) does not equal full-employment GDP D) equals the quantity of real GDP supplied
In the current Post-Industrial economy, international trade in services (including banking and financial services)
A) dominates world trade. B) does not exist. C) is an increasingly important component of global trade. D) is relatively stagnant. E) far surpasses the predictions of economist Alan Blinder.
A . What is an open market operation? Who conducts them? b. What kind of open market operation would cause the money supply to contract? How does this work? When would the Fed be most likely to do this?
A pack of cigarettes costs $6. At the age of 16, some people start smoking one pack per day or 365 packs a year. Assume there is no increase in the future price of cigarettes. How much retirement wealth are these people sacrificing if they smoke until reaching the age of 66?
A) $2,190 (=$6 * 365 days). B) $ 109,500 (=$2,190 * 50 years). C) $6. D) $109,500 plus the compound interest income that could have been earned on the funds over the 50 years.