Which of the following are substitute goods?
A) margarine and butter
B) peanut butter and jelly
C) pizza and soda
D) trucks and gasoline
Answer: A
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The relationship between the nominal interest rate, the real interest rate, and the inflation rate is that the
A) real interest rate is equal to the nominal interest rate plus the inflation rate. B) nominal interest rate is equal to the real interest rate plus the inflation rate. C) real interest rate is equal to the nominal interest rate multiplied by the inflation rate. D) nominal interest rate is equal to the real interest rate minus the inflation rate. E) nominal interest rate is equal to the real interest rate divided by the inflation rate.
Explain the concept of adverse selection. Give an example
What will be an ideal response?
Assume that in a price-fixing game, if Player A breaks the agreement in the first year, she earns $11 while Player B earns $5 . However, if Player A breaks the agreement once, Player B decides to break the agreement for eternity, leaving each to receive $8 per year for the rest of their lives. If they both keep the agreement each receives $9 per year for the rest of their lives. If the discount
rate is 30 percent per period: a. Player A will prefer to break the agreement in the first year. b. Player A will prefer to break the agreement in the second year. c. Player A will prefer to keep the agreement throughout her life. d. Player A will prefer to keep the agreement only for the first five years.
Advocates of antipoverty programs claim that
a. the government has good information about what people are willing to pay to eliminate poverty. b. fighting poverty is a public good. c. private sector will incur higher costs than the public sector for these programs. d. All of the above are correct.