The primary additional insight provided by expanding the theory of demand from two to three goods is that a pair of goods may now be:
a. gross substitutes.
b. gross complements.
c. net substitutes.
d. net complements.
d
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Forward Guidance refers to:
A. a process similar to open-market purchases B. information that a central bank provides to the financial markets regarding its expected future monetary- policy path C. lending of reserves by the Federal Reserve to commercial banks D. a process similar to open-market sales
We observe evidence of a shortage when we see
A) the quantity purchased is greater than the quantity supplied. B) the quantity purchased is less than the quantity supplied. C) nonmonetary costs of acquisition have risen. D) goods have becomes more scarce. E) prices have increased suddenly and substantially.
The basic cause of deadweight losses from the existence of common resources and externalities is
A) the use of a market system to deal with scarcity. B) the self-interested rationality of human beings. C) the absence of government intervention. D) a lack of clearly defined and enforceable property rights.
The introduction of seat belts increased the number of accidents, even though the number of fatalities decreased. This is most likely a result of
a. Moral hazard b. Adverse selection c. seat belts distracting drivers d. None of the above