Which of the following is a case of asymmetric information:
A. Neither you nor the insurance company has perfect information about whether a flood will occur.
B. The buyer and seller of a used car don't know how long the car will operate.
C. A provider of health insurance does not know whether a specific client is a smoker or not.
D. None of the above are examples of asymmetric information.
Answer: C
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Suppose the measured unemployment rate is 7.5% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will
A) stimulate the economy when it should be slowed. B) slow the economy when it should be stimulated. C) stimulate the economy, exactly as called for. D) slow the economy, exactly as called for.
Refer to Table 2-8. What is Wilma's opportunity cost of making a bench?
A) 1.3 statues B) 3 statues C) 1/3 of a statue D) 1/2 of a bench
After the transaction in Table 13-1 is completed, what happens to actual reserves, required reserves, and excess reserves? Assume the required reserve ratio is 25 percent
a. Actual reserves increase by $10 million, required reserves increase $2.5 million, and excess reserves increase by $7.5 million. b. Actual reserves decrease by $10 million, required reserves decrease $2.5 million, and excess reserves decrease by $7.5 million. c. Actual reserves increase by $10 million, required reserves are unchanged, and excess reserves increase by $10 million. d. Actual reserves decrease by $10 million, required reserves decrease by $10 million, and excess reserves are unchanged.
In a 2007 New York Times article Paul Krugman wrote that
a. the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. b. the negative effects of third world exports on U.S. wages may be increasing. c. there are social gains to the U.S. from free trade. d. high wage countries account for a growing share of U.S. imports of manufactured goods.