Monetary policy directly affects:
A. the antitrust laws.
B. tax rates.
C. social spending.
D. the availability of credit.
Answer: D
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Who is affected when a Pigouvian subsidy is imposed on a market with a positive externality?
A. Producers B. Consumers C. Those affected by the externality D. All of these groups would be affected.
According to classical economists,
a. prices are rigid. b. both V and Q are variable for an economy in short-run equilibrium. c. changes in M cause changes in V. d. the velocity of money is constant.
It is not uncommon for businesses to pay contingent bonuses that depend on performance. Contingent bonuses are an example of what the text calls:
A. an incentive-compatible contract. B. a network externality. C. X-inefficiency. D. a winner-take-all contract.
In the presence of asymmetric information, a hire contract
A) achieves production efficiency. B) can lead to opportunistic behavior on the part of the agent. C) is impossible to write. D) will result in the principal earning all of the profit.