Which of the following statements about asymmetric information is true?
A. Asymmetric information reduces market failures because it makes it easier for individuals to engage in transactions that in the presence of perfect information would take place.
B. Asymmetric information occurs when one party to a transaction has relevant information to the transaction that the other party does not have.
C. Asymmetric information occurs only in the market for used cars and in the insurance market.
D. Asymmetric information can only be solved through government intervention.
Answer: B
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The assessed value of a home is
A. the value that the jurisdiction uses to assign taxes. B. an annual 6% increase in the value of a home. C. the annual rate of deprecation of a home because of use. D. always lower than its market value.
If aggregate demand shifts from AD4 to AD5,
A. output will rise and the price level will fall.
B. output will fall and the price level will rise.
C. neither output nor the price level will change.
D. the price level will rise and output will remain unchanged.
Which of the following is an example of a price ceiling?
A. the minimum wage B. rent controls C. agricultural price supports D. None of these is correct.
Answer the following statements true (T) or false (F)
1) When commercial banks retire outstanding loans, the supply of money is increased. 2) Commercial banks monetize claims when they sell securities to Federal Reserve Banks. 3) The banking system can lend by a multiple of its excess reserves because lending does not result in a loss of reserves to the banking system as a whole. 4) The monetary multiplier and the spending multiplier are two ways of referring to the same concept.