One way to solve the problems caused by information asymmetry is:
A. building a reputation.
B. signaling.
C. screening.
D. All of these are solutions to information asymmetry.
Answer: D
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Growth in aggregate demand will
A) cause the short-run Phillips curve to shift to the left. B) increase unemployment. C) move the economy to a higher point on the short-run Phillips curve. D) cause deflation.
A 10 percent increase in the price of sugar reduces sugar consumption by about 5 percent. The increase causes households to
a. spend more on sugar. b. spend less on sugar. c. spend the same on sugar. d. consume more goods like coffee and tea that are complements of sugar.
Exponential smoothing is a forecasting method where the weights on the lagged dependent variable decline to zero exponentially.
Answer the following statement true (T) or false (F)
When prices rise, consumers and businesses hold larger money balances. This reduces the supply of loanable funds, increases the interest rate, and discourages both consumption and investment. This process is called the:
A. interest-rate effect. B. real balance effect. C. investment effect. D. disinvestment effect.