Deflation is bad because:
A. wages decline.
B. prices decline.
C. monetary policy becomes impotent.
D. fiscal policy becomes impotent.
E. deflation is not bad.
Ans: C. monetary policy becomes impotent.
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The opportunity cost of producing one more unit of a good or service is the
A) marginal cost. B) marginal benefit. C) efficient level of production. D) market outcome. E) price of the good or service.
This chapter discussed natural and randomized experiments. How does a natural experiment differ from a randomized one? Which one is likely to yield more accurate results?
What will be an ideal response?
The principal-agent problem
A) occurs when managers have more incentive to maximize profits than the stockholders-owners do. B) in financial markets helps to explain why equity is a relatively important source of finance for American business. C) would not arise if the owners of the firm had complete information about the activities of the managers. D) explains why direct finance is more important than indirect finance as a source of business finance.
The players in a two-person game are choosing between Strategy X and Strategy Y. If the second player chooses Strategy X, the first player's best outcome is to select X. If the second player chooses Strategy Y, the first player's best outcome is to select X. For the first player, Strategy X is called a
a. dominant strategy. b. collusive strategy. c. repeated-trial strategy. d. cartel strategy.