Why is adverse selection more likely in financial markets when interest rates rise?
A) The remaining borrowers are more likely to be risky.
B) Higher interest rates are likely to hurt the economy.
C) If firms have to pay higher interest rates, they may choose to use the funds differently than they first intended.
D) Banks eliminate risky borrowers by raising interest rates.
A
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When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy, then
A) inflation will be lower. B) output will be at its potential. C) output will be lower. D) inflation will not change. E) both A and B.
Which of the following is inconsistent with monopoly?
a. a single seller b. economies of scale c. free entry and exit d. selling in the elastic portion of the demand curve in order to maximize profits
Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. What value does Arthur place on his cell phone?
A) $0 B) $150 C) $225 D) $300
In recent years, Head Start spending has grown
A. mainly due to the soaring costs of classroom materials. B. much faster than enrollment. C. on par with enrollment. D. much slower than enrollment.