Moral hazard problems arise when
A) lenders have difficulty in distinguishing between good and lemon firms.
B) when a downturn in economic activity makes repaying loans difficult for borrowers.
C) borrowers have an incentive to act in ways that do not reflect the lender's interests.
D) borrowers default on loans.
C
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A major university hired an economist to forecast enrollment to produce a prediction of “head count.” One variable that she would probably emphasize more than any other in trying to make the forecast
A. how interested people are in attending college. B. the employment opportunities that college opens up. C. survey results on public interest in education. D. her instinct about what the public wants. E. the price of attending—tuition.
During a recession unemployment benefits rise. This rise in benefits makes aggregate demand higher than otherwise
a. True b. False Indicate whether the statement is true or false
Which one of the following would count as investment in the GDP accounts?
A. Purchase of a new airplane by an airline. B. Purchase of a U.S. government bond. C. Purchase of 100 shares of Wal-Mart stock. D. Purchase of an existing house.
If a nation's nominal Gross Domestic Product (GDP) is $20 billion, its money supply is $8 billion, and its price level is 2, then the velocity of money is
A. 10. B. 2.5. C. 2. D. 16.