The potential for recipients of a loan to engage in riskier behavior after receiving the financing is called
A) adverse selection. B) moral hazard. C) adverse hazard. D) moral selection.
B
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When taxes or subsidies on a particular product are introduced into the general equilibrium model we can be sure that
A. subsidies make the product appear too cheap to its producer. B. we get too much of the subsidized product and too little of the taxed product. C. a more fair allocation of resources is possible. D. taxes make the taxed product appear too expensive to its producer.
Refer to Goods X and Y. If the indifference curves are horizontal, then we can conclude that
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. X does not affect the individual’s utility. b. Y does not affect the individual’s utility. c. both X and Y affect the individual’s utility. d. neither good affects the individual’s utility.
If the value of the government multiplier is 1.5, which of the following is likely to be true if all other variables remain unchanged?
A) A $1 increase in government expenditure reduces gross domestic product by $1.50. B) A $1.50 increase in government expenditure increases gross domestic product by $1.50. C) A $1.50 increase in government expenditure reduces gross domestic product by $1.50. D) A $1 increase in government expenditure increases gross domestic product by $1.50.
If the government cuts taxes ________
A) disposable income falls B) planned expenditures rise C) the IS curve shifts to the left D) all of the above E) none of the above