When consumers have asymmetric information and when search costs and the number of firms are large, a single-price equilibrium in a competitive market
A) is impossible.
B) occurs when price equals average cost.
C) occurs when price equals marginal cost plus the search cost.
D) occurs when the price is the price a monopoly would set.
D
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Political stability is an important ingredient in creating and sustaining economic growth
Indicate whether the statement is true or false
A bank seeks a 4% real return on its loans and predicts a 4% annual rate of inflation. It should therefore charge a nominal interest rate of
A) 0%. B) 1%. C) 4%. D) 8%. E) 12%.
If the spot exchange rate between dollars and pounds is equal to 2 dollars for one pound and the forward exchange rate equals 2.10 dollars for one pound, then
A) the dollar is trading at a forward premium. B) the pound is trading at a forward discount. C) the pound is trading at a forward premium. D) the market presents an opportunity for arbitrage.
If Congress increased the tax rate on interest income, investment
a. would increase and saving would decrease. b. would decrease and saving would increase. c. and saving would increase. d. and saving would decrease.