Credence goods are particularly susceptible to the lemons problem because
A) they have qualities that are difficult for producers to fully assess.
B) they have qualities that are difficult for consumers to fully assess.
C) creative responses among producers create volatility in market supply.
D) creative responses among consumers create volatility in market demand.
Answer: B
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Economists tend to judge a model based upon
A) the reality of its assumptions. B) the accuracy of its predictions. C) its simplicity. D) its complexity.
Because of crowding out
A) expansionary fiscal policy during a recession must involve a tax increase. B) expansionary fiscal policy during a recession is reinforced by private investment spending. C) the effect of expansionary fiscal policy is partially offset by the decline in investment spending caused by higher interest rates. D) expansionary fiscal policy is completely achieved even with a decline in investment spending.
Investing in risky assets in the hope of earning profits is called speculation
a. True b. False Indicate whether the statement is true or false
When decisions are made by majority rule, elected officials have a strong incentive to
A) keep taxes low, run budget surpluses, and spend taxpayer funds wisely. B) protect individual rights and avoid favoritism of some individuals and voting blocs relative to others. C) take resources from taxpayers and use them to provide favors for various voting blocs in exchange for contributions and other forms of political support. D) serve the interest of consumers and taxpayers, and undertake only projects that are efficient.