Sally would only agree to a second date with Andy if she sees him leave a generous tip for the waiter on their first dinner date. This is an example of a
a. Screening mechanism
b. Signaling mechanism
c. Way to waste money
d. None of the above
a
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In a monopolistically competitive market with Dixit-Stiglitz preferences, equilibrium price falls as the goods in the differentiated product market become more substitutable.
Answer the following statement true (T) or false (F)
What does "diminishing marginal utility" mean?
What will be an ideal response?
The reserve ratio is 10 percent, banks do not hold excess reserves, and people hold only deposits and no currency. When the Fed sells $20 million worth of bonds to the public, bank reserves
a. increase by $20 million and the money supply eventually increases by $20 million. b. increase by $20 million and the money supply eventually increases by $200 million. c. decrease by $2 million and the money supply eventually increases by $20 million. d. decrease by $20 million and the money supply eventually decreases by $200 million.
An important cause of recessions is an unexpected negative supply shift, such as higher oil prices.
Answer the following statement true (T) or false (F)