Unemployment that is caused by business recessions is called
A. seasonal unemployment.
B. frictional unemployment.
C. structural unemployment.
D. cyclical unemployment.
Answer: D
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When society must decrease the production of something in order to produce more of another good or service, society has necessarily achieved
A) only production efficiency. B) only allocative efficiency. C) both production efficiency and allocative efficiency. D) a free lunch. E) the maximum opportunity cost..
During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?
What will be an ideal response?
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet)
What is the source of the asymmetric information problem in this case? A) The bank has more information about the true cost of the corporate jet than the firm. B) The bank has more information about the opportunity cost of the loaned funds. C) The firm has more information about the actual use of the funds than the bank. D) The firm has more information about the interest rate on the loan than the bank.
An increase in an individual's income without changing relative prices will
a. rotate the budget constraint about the X-axis. b. shift the indifference curves outward. c. shift the budget constraint outward in a parallel way. d. rotate the budget constraint about the Y axis.