High net worth helps to diminish the problem of moral hazard problem by
A) requiring the state to verify the debt contract.
B) collateralizing the debt contract.
C) making the debt contract incentive compatible.
D) giving the debt contract characteristics of equity contracts.
C
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The figure above shows the market for brooms. Which of the following could lead to the production of fewer than 600 brooms?
A) a monopoly B) a deadweight loss C) subsidies D) an external cost E) a big tradeoff
Some amount of every security in existence is held in the hypothetical __________ portfolio
A) perfect B) market C) systematic D) nonsystematic
The price effect describes the:
A. decrease in the quantity of labor supplied in response to a higher wage. B. increase in the quantity of labor supplied in response to a lower wage. C. increase in the quantity of labor supplied in response to a higher wage. D. increase in the quantity of labor demanded in respond to a higher wage.
Consider a simple linear regression model, y = ?0+ ?1x + u,. What does the zero conditional mean assumption imply?
A. The expected value of the error term, u , is zero, regardless of what the value of the explanatory variable, x, is. B. The estimated average value of ?1 is zero. C. The expected value of the explained variable, y , is zero, regardless of what the value of the explanatory variable, x , is. D. The estimated average value of ?0 is zero.