How does adverse selection affect the willingness of corporations to issue stock?
What will be an ideal response?
Since adverse selection reduces the price of the stock of a good corporation below its true value, corporations will be less likely to issue shares of stock.
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Which of the following statements is true?
A) At wages above the equilibrium wage rate, quantity supplied of labor exceeds the quantity demanded of labor. B) At wages below the equilibrium wage rate, quantity supplied of labor exceeds the quantity demanded of labor. C) At the equilibrium wage rate, quantity supplied of labor exceeds the quantity demanded of labor. D) At the equilibrium wage rate, quantity demanded of labor exceeds the quantity supplied of labor.
Suppose Paul's utility depends on the amount of time spent playing on the Internet (x) and the amount of time playing video games (y), and his utility function is
U(x,y) = 3x0.2 y0.8 He has 15 hours of free time to spend on these two activities each week, and his goal is to maximize his utility. a. Set up the Lagrangian for this constrained maximization problem. b. What are the necessary conditions for the optimum from the Lagrangian? c. What is the optimal amount of time spent surfing the Internet and playing video games each week?
Suppose the economy is suffering in a recessionary period. Firms are facing increasing inventories and individual consumers are increasing their saving to prepare for hard times ahead. What is likely to happen to the economy and can it correct itself and grow toward full employment in the short run?
Which statement is true?
A. M1 is larger than M2. B. M1 + M2 = M3. C. M2 + large denomination time deposits = M3. D. M1 times M2 = M3.