One way of describing the solution that high net worth provides to the moral hazard problem is to say that it
A) collateralizes the debt contract.
B) makes the debt contract incentive compatible.
C) state verifies the debt contract.
D) removes all of the risk in the debt contract.
B
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Suppose a roll of paper towels costs $5 at Sam's Quick Stop, a local quick stop, and the same roll of paper towels costs $2 at Big Supplies, a large, retailer located in a more remote location. If a customer's total cost of travel to Sam's Quick Stop is $2 and is $6 to Big Supplies, which of the following is true?
A) The consumer is indifferent as to where they buy the paper towels. B) It is cheaper for the consumer to buy the paper towels at Sam's Quick Stop. C) It is cheaper for the consumer to buy the paper towels at Big Supplies. D) It is more expensive for the consumer to buy the paper towels at Sam's Quick Stop.
If a price floor is a binding constraint on a market, then a. the equilibrium price must be above the price floor
b. the quantity demanded must exceed the quantity supplied. c. sellers cannot sell all they want to sell at the price floor. d. buyers cannot buy all they want to buy at the price floor.
In the open-economy macroeconomic model, if for some reason foreign citizens want to purchase more U.S. goods and services at each exchange rate, then
a. the demand for dollars in the market for foreign-currency exchange shifts right. b. the demand for dollars in the market for foreign-currency exchange shifts left. c. the supply of dollars in the market for foreign-currency exchange shifts right. d. the supply of dollars in the market for foreign-currency exchange shifts left.
For a fixed target real interest rate and target inflation rate, when inflation increases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. decreases; decreasing B. increases; increasing C. increases; decreasing D. decreases; increasing