How does imperfect information affect market decisions?
a. It doesn't, because information is generally excellent.
b. It leads to inefficient outcomes in which expected benefits and actual benefits diverge.
c. It leads to wasteful attempts to improve information.
d. It leads to exploitation of sellers by buyers.
b
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According to the permanent income hypothesis, consumption spending depends largely on ________
A) current income B) the savings rate C) a consumer's lifetime resources D) the level of current income plus the value of the assets owned by the household
One characteristic of a Giffen good is that it
A) is a luxury good. B) is an inferior good. C) has an upward-sloping Engel curve. D) All of the above.
If people behave according to rational expectations theory, people would expect the rate of inflation this year to be:
A. the same as last year. B. zero, regardless of the rate last year. C. the rate based on predictable monetary and fiscal policies. D. always higher than last year.
A surplus of a product will arise when price is:
A. below equilibrium, with the result that quantity supplied exceeds quantity demanded. B. above equilibrium, with the result that quantity demanded exceeds quantity supplied. C. below equilibrium, with the result that quantity demanded exceeds quantity supplied. D. above equilibrium, with the result that quantity supplied exceeds quantity demanded.