The Paradox of Thrift highlights the idea that:
A. Saving more is good for the economy in the short run
B. Saving more can be bad for the economy during a recession
C. In spending more, households will end up saving less
D. In spending more, workers may end up losing their jobs
B. Saving more can be bad for the economy during a recession
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In the figure above, ________ is a technologically efficient point
A) d B) f C) g D) None of the selections is correct.
An efficiency wage premium serves the same function as a bond because, just as with a bond, the premium represents
A) the amount the employee loses if caught shirking. B) the expected value of the amount the employee loses if he shirks. C) the cost of monitoring the employee. D) the gain to the employee if he shirks.
A result of a positive externality in the production of a good is that
A) the price system will over-allocate resources to the production of that good or service. B) the price system will under-allocate resources to the production of that good or service. C) the market supply will be too high. D) the market demand will be too high.
The potential for a decline in product quality due to asymmetric information is commonly referred to as
A) the lemons problem. B) planned obsolescence. C) diminishing marginal product. D) the externality problem.