Most individuals save at banks rather than lend directly because:
A. banks can reduce the cost of information asymmetry.
B. moral hazard exists only when individuals make loans directly to borrowers, it does not occur when banks issue loans.
C. information asymmetry is a problem for individuals but not for banks.
D. the bank creates information asymmetry.
Answer: A
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Long-run increases in living standards, as measured by real GDP per person, are primarily the result of increases in:
A. government budget surpluses. B. average labor productivity. C. the money supply. D. population.
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) government purchases. B) the money supply and a decrease in interest rates. C) taxes. D) oil prices.
Elasticity measures
A) the slope of a demand curve. B) the inverse of the slope of a demand curve. C) the percentage change in one variable in response to a one percent increase in another variable. D) sensitivity of price to a change in quantity.
If the government wants to reduce smoking, it should impose a tax on
a. buyers of cigarettes. b. sellers of cigarettes. c. either buyers or sellers of cigarettes. d. whichever side of the market is less elastic.