In a competitive economy, the market system can still fail to produce the efficient level of output due to side effects called ______.
a. externalities
b. subsidies
c. signals
d. warranties
a. externalities
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The consumption function has two components: (1) autonomous consumption and (2)
a. fixed consumption b. consumption that varies with income c. transitory consumption d. permanent consumption e. consumption that varies with saving
Adverse selection occurs in the used car market because:
A. the buyer has more information than the seller. B. the seller has more information than the buyer. C. both the buyer and the seller have incomplete information. D. Any of these could be the cause of adverse selection in the used car market.
Contractionary monetary policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________
A) higher; higher B) higher; lower C) lower; lower D) lower; higher
Which of the following federal agencies is NOT engaged in economic regulation?
A) the Federal Reserve B) Federal Aviation Administration C) Food and Drug Administration D) Federal Deposit Insurance Corporation