Moral hazard problems arise because:
A. lenders charge interest rates that are too low.
B. lenders cannot distinguish good from bad risks.
C. firms hire incompetent employees.
D. borrowers have incentives to act in ways that do not reflect the lender's interest.
Answer: D
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How can you compute the total utility derived from consuming five hamburgers using marginal utilities?
What will be an ideal response?
An adverse oil price increase will shift the short-run aggregate supply curve:
A) leftward. B) rightward. C) will not shift. D) none of the above.
You have just noticed that the dollar appreciated and you suspect that U.S. policymakers were behind this change. Which would you choose as the most likely cause of this appreciation in the real exchange rate?
A) An increase in the money supply B) A decrease in the money supply C) A temporary increase in government purchases D) A temporary decrease in taxes
If the producer of an information product engages in marginal cost pricing, it earns
A. zero economic profits. B. negative economic profits. C. positive economic profits. D. a normal profit.