Figure 9.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that 50% of the used cameras in the market are lemons (low quality), how much will they pay for a used camera?
A. $25
B. $50
C. $75
D. $125
Answer: C
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Liquidity refers to
A) the number of times a dollar changes hands in the creation of GDP in an economy. B) the number of shares of stock a corporation issues. C) the ease with a stock can be traded for a bond. D) the ease with which a financial security can be traded for cash.
In a city that has rent control for apartments, there is
A) less turnover of apartments. B) a surplus of apartments available to rent. C) a shortage of renters in the city. D) neither a surplus nor a shortage of apartments.
In the United States and in virtually every other country, the printing of money is
A. limited by the supplies of gold and silver the central bank holds in reserve. B. strictly a government monopoly. C. open to the free market so that different monies can compete for acceptance with one another. D. a privilege that is allowed only to banks that are members of the Federal Reserve System.
One area of disagreement among economists is the impact that income tax cuts will have on a budget deficit. Explain in detail the reasoning of both sides of this argument