In an advertisement for credit cards, the statement is made, "Think of a credit card as smart money." An economist's reaction to this would be that a credit card is:
A. dumb money.
B. simply money.
C. actually better than money.
D. not money.
Answer: D
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The invisible hand suggests that:
A) individuals working for self-interest will eventually maximize the well-being of society. B) equilibrium in a competitive market is determined independent of demand and supply. C) government intervention is necessary to rectify market imperfections. D) the price mechanism allocates resources only to the people with high income in the country.
Suppose that in a market for used cars, there are good used cars and bad used cars (lemons). Consumers are willing to pay as much as $9,000 for a good used car but only $3,000 for a lemon
Sellers of good used cars value their cars at $7,500 each and sellers of lemons value their cars at $1,500 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this information, what is the likely outcome in the market for used cars? A) Sellers of lemons will drop out of the market. B) Sellers of good used cars will drop out of the market. C) Used cars will sell for $6,000. D) Sellers of good used cars will incur losses.
Which of the following types of mortgage loans became more common during the housing boom of the early-to-mid 2000s?
A) those with flawed credit histories B) thirty-year, fixed-rate mortgages C) prime Mortgages D) those with down payments of at least 20%
A change in the ceteris paribus conditions for supply will lead to a
A) change in quantity supplied. B) change in supply. C) change in quantity supplied and a change in supply. D) change in how consumers view the quality of the good.