The "lemons" problem is used to explain the concept of:
A. complete information.
B. adverse selection.
C. moral hazard.
D. produce markets.
B. adverse selection.
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Which of the following is true of interest-rate risk?
A. It refers to the probability that a borrower will default on debt obligations. B. It is the risk that the coupon rate for a bond will change, affecting current bondholders' coupon payments. C. Individuals owning long-term bonds are exposed to greater interest-rate risk. D. It is the risk that the face value of a bond will change before maturity.
If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve
A) is elastic. B) has a unitary elasticity. C) is inelastic. D) is perfectly inelastic.
In a small town of 100 people, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not have jobs, but wanted them. What is the participation rate in this town?
A. 87.5% B. 72.0% C. 81.1% D. 63.0%
An example of moral hazard is
a. workers working diligently even though the boss is not looking b. health care insured dieting and exercising c. drivers of safer cars turning their phones off before driving d. borrowers investing their loan proceeds differently than the bank requires