A consequence of adverse selection is:
A. buyers make irrational decisions because they lack information.
B. sellers gain surplus they would have lost with complete information.
C. transactions do not take place that would have been possible if the parties had the same information.
D. buyers gain surplus they would have lost with complete information.
Answer: C
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The percentage of income that Americans save each year ________
A) is much higher than the percentage the Chinese citizens save B) is higher than the saving rate of most industrialized countries C) is lower than the saving rate of most industrialized countries D) increased by a factor of five every year since the 1970s E) none of the above
Assume that the Fed knows a demand shock has occurred in the economy. It takes the Fed 2 months to adjust policy to the shock, and it takes the economy 14 months for the policy change to affect the economy
The 2 month time period refers to the ________, and the following 14 month time period refers to the ________. A) policy lag; implementation lag B) recognition lag; implementation lag C) implementation lag; impact lag D) policy lag; recognition lag
One source of the supply of dollars in the foreign exchange market is
A) U.S. companies importing foreign goods. B) foreign citizens buying U.S. goods. C) SDRs being converted into dollars. D) the U.S. Mint buying dollars from the Bank of England.
Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases. What happens to the industry in the long run?
a. It experiences no change from the original equilibrium b. It experiences a higher equilibrium price and produces less output c. It experiences a lower equilibrium price and produces less output d. It experiences the same equilibrium price but produces more output e. It experiences the same equilibrium price but produces less output