Moral hazard occurs when one side of an economic relationship:
A. takes costly actions that the other side of the relationship cannot observe.
B. takes actions that is contrary to the religious beliefs of the other side of the economic relationship.
C. takes actions that the other side of the relationship enjoys doing.
D. takes actions that the other side of the relationship cannot force them to do.
Answer: A
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Econville opens up trade with its neighboring countries. This causes the number of sellers of science fiction novels to increase. What happens to the equilibrium price and quantity?
a. Price and quantity both increase. b. Price decreases, and quantity increases. c. Price increases, and quantity decreases. d. Price and quantity both decrease.
Comparing State economies to that of the US as a whole shows that
a) about half the States are in recession at any point in time b) when the US enters a recession, about 20% of the States experience economic expansion, and vice versa c) there is very little correlation between the national and regional economies d) there is a highly positive correlation between the national economy and most State economies e) the 12 Federal Reserve districts experience business cycles independently of each other
Other things equal, the greater the interest rate:
A. the higher the NPV. B. the higher the PV. C. the lower the NPV. D. None of the statements associated with this question are correct.
A recession is commonly defined as a period with
A) negative growth rate in real GDP that lasts at least one quarter. B) positive growth rate in real GDP that lasts at least one quarter. C) positive growth rate in real GDP that lasts at least two quarters. D) negative growth rate in real GDP that lasts at least two quarters.