As the number of firms in an oligopolistic market increases, ________
A) prices tend to decline toward marginal cost
B) prices tend to rise above marginal cost
C) the market demand for the good tends to fall
D) profits earned by firms tend to rise
A
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If the AD curve shifts rightward, then
A) both the price level and real GDP will decrease. B) both the price level and real GDP will increase. C) the price level will increase, but no change will occur in real GDP. D) the price level will not change, but real GDP will increase. E) potential GDP increases.
Which of the following situations is an example of bank mismanagement?
a. Bank W decreasing its rate of interest below the rate set by the Fed to attract more borrowers b. Bank X charging high fees on the processing of loans and checks c. Bank Y refusing loans to all clients who have an asset value below 25,000 d. Bank Z providing loans only to large corporate houses with a high net worth
What is the drawback for a country that chooses to fix its exchange rate?
a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore. b. Businesses in the country are more exposed to business risks associated with exchange rate changes. c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed. d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.
In the context of insurance, moral hazard refers to:
A. when risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual. B. the tendency for high-risk individuals to seek out more insurance than low-risk individuals. C. when people organize themselves in a group to collectively absorb the cost of the risk faced by each individual. D. the tendency for people to behave in a riskier way after they have acquired insurance.