Which of the following statements is true?
A. Unsecured loans are no longer made; all loans now must have some form of collateral.
B. Unsecured loans generally involve very high interest rates as a result of adverse selection.
C. Unsecured loans are only made to individuals with very high net worth because it is the only way to limit the risk.
D. Unsecured loans generally involve very high interest rates as a result of the free-rider problem.
Answer: B
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Ricardian equivalence argues that when the government
A) increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. B) cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. C) cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. D) cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. E) cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
Federal spending and taxation both affect and are influenced by the overall level of economic activity
Indicate whether the statement is true or false
When economists refer to an economy's price level, they indicate: a. the rate of inflation in that economy
b. the prices of goods and services relative to consumers' incomes. c. a composite measure of prices of all goods and services. d. a period of level, or steady, prices in that economy. e. the price of a specific consumer good.
Price elasticity of demand can be written as percentage change in Q divided by percentage change in P
a. True b. False Indicate whether the statement is true or false