Which of the following is often referred to as the basic postulate of economics?
A) Incentives matter—individuals respond in predictable ways to changes in personal costs and benefits.
B) Individuals act only out of selfish motives.
C) The accuracy of the assumptions is the best test of an economic theory.
D) The value of a good is objective; it is equal to the cost of producing the good.
A) Incentives matter—individuals respond in predictable ways to changes in personal costs and benefits.
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Reserve requirements are the
A) minimum percentages of deposits that banks must hold as reserves. B) minimum amount of an owner's financial resources that must be placed in a depository institution. C) rules covering the types of deposits that banks may offer. D) rules covering the types of assets that banks may purchase.
According to Keynesian macroeconomists, prices adjust ________ to shocks, so the government should ________
A) slowly; do little B) rapidly; do little C) rapidly; fight recessions D) slowly; fight recessions
Higher indifference curves represent lesser satisfaction
a. True b. False Indicate whether the statement is true or false
You may be unwilling to buy a used car because you suspect the last owner found out the car was a lemon. You may treat a car you rented with a little less care than you would use on your own car
a. Both examples primarily illustrate adverse selection. b. Both examples primarily illustrate moral hazard. c. The first example primarily illustrates adverse selection; the second primarily illustrates moral hazard. d. The first example primarily illustrates moral hazard; the second primarily illustrates adverse selection.