Which of the following is true of implicit contracts?
A. The opportunity cost of residual loss is low.
B. The gains from trade are low and there are market failures.
C. Enforcement depends on the private incentives of individuals.
D. Agents do not act in the best interest of principals.
Answer: C
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The figure below shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. 
This monopolist maximizes its profit by producing ________ units per day and charging a price of ________ per unit.
A. 8; $6 B. 8; $14 C. 4; $6 D. 4; $18
If the income-expenditure multiplier equals 2.5 and a 1 percent increase in the real interest rate reduces autonomous spending by 200 units, then a 1,000 unit expansionary gap can be eliminated by ________ the real interest rate by ________ percent.
A. increasing; 2.5 B. increasing; 2.0 C. decreasing; 2.0 D. increasing; 4.0
Refer to Figure 13-19 to answer the following questions
a. What is the productively efficient output? b. What is the allocatively efficient output? c. What is the amount of excess capacity? d. Suppose the firm is currently producing 14 units. What happens if it increases output to 17 units?
Suppose an economy had an inflation rate of 7 percent last year. This has decreased to 6 percent this year. This means that the economy is: a. suffering from hyperinflation. b. experiencing deflation. c. experiencing disinflation
d. experiencing a wage-price spiral. e. experiencing a decrease in real wage.