Moral hazard is a problem that arises when:
A. government discourages companies from taking risks.
B. people benefit from the negative actions of others.
C. people are required to bear the negative consequences of their actions.
D. people don't have to bear the negative consequences of their actions.
Answer: D
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An increase in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate
Refer to Figure 9.7. Before the policy was implemented, consumer surplus was
A) $30. B) $60. C) $45,000. D) $90,000. E) $180,000.
In the game in which two oil companies own adjacent oil fields, the companies will not use the oil efficiently because
a. neither company has a dominant strategy in the game. b. the companies collude and produce a quantity of oil that is less than the socially-efficient quantity. c. the pool from which they recover the oil is a common resource. d. the pool from which they recover the oil is not large enough to allow both companies to earn a positive profit.
The quantity demanded of Coca Cola has increased. The best explanation for this is that
A. the price of Pepsi has decreased. B. the price of Coca Cola has decreased. C. Coca Cola consumers had an increase in income. D. Coca Cola has instituted a new, successful advertising campaign.