Adverse selection problems can occur when buyers and sellers have different amounts of information about a good for sale.
Answer the following statement true (T) or false (F)
True
This is the way in which adverse selection problems are defined.
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The appropriate monetary policy response to a situation with deficient financial liquidity
A) an open market sale of government bonds. B) to do nothing. C) an open market purchase of government bonds. D) to increase reserve requirements.
GDP can rise as a result of a rise in __________________, and Real GDP can rise as a result of a rise in _______________________
A) prices or output; prices only. B) prices only; prices or output. C) prices or output; output only. D) prices or output; prices or output.
Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should:
A. accept the raise because his after-tax income will rise by $1,500. B. reject the raise because his after-tax income will fall by $3,000. C. reject the raise because his after-tax income will fall by $4,500. D. reject the raise because his after-tax income will fall by $6,000.
A well-capitalized bank:
A) does not have stockholders' equity. B) is prone to bank runs. C) owns far more than it owes. D) only accepts deposits but does not advance loans.