If the discouraged workers were included in the labor force,
a. the unemployment rate would fall.
b. the labor force would decrease.
c. the employment rate would rise.
d. the unemployment rate would rise.
d
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Analysis of adverse selection indicates that financial intermediaries, especially banks
A) have advantages in overcoming the free-rider problem, helping to explain why indirect finance is a more important source of business finance than is direct finance. B) despite their success in overcoming free-rider problems, nevertheless play a minor role in moving funds to corporations. C) provide better-known and larger corporations a higher percentage of their external funds than they do to newer and smaller corporations which rely to a greater extent on the new issues market for funds. D) must buy securities from corporations to diversify the risk that results from holding non-tradable loans.
If an agent is risk neutral and a principal is risk averse, which of the following contracts would be efficient in risk bearing?
A) A fixed fee is paid to the agent. B) A fixed fee is paid to the principal. C) An hourly rate is paid to the agent. D) The agent enjoys a share of the profit.
One fundamental idea in macroeconomics about inflation is:
A. if all wages rise, then inflation doesn't really affect anyone's purchasing power. B. when all prices rise, inflation occurs and everyone is worse off. C. keeping prices constant is the only way to ensure increasing purchasing power over time. D. if all prices decline, the purchasing power of everyone declines.
Draw in a new demand curve, D1, on the graph, showing a decrease in demand What happens to price and quantity?
