Suppose a plaintiff hires a lawyer to represent her in a court case. The lawyer will be paid a fixed fee. Under this contract
A) efficiency is achieved.
B) the client bears all of the risk.
C) the lawyer has an incentive to lie about his hours worked.
D) All of the above.
B
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In a small economy, gross investment is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is GDP for this economy?
A) $10,700 B) $10,300 C) $10,200 D) $10,000
Under a system of fixed exchange rates, what happens if a country's currency is overvalued?
A) The central bank loses official reserve assets. B) The central bank gains official reserve assets. C) The currency appreciates. D) The exchange rate rises.
One year nominal GDP was $36 trillion and the price index was 120. Real GDP that year was:
a. $12 trillion b. $30 trillion c. $48 trillion d. $24 trillion
Figure 14.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), how many lemons (low quality) will be supplied by sellers?
A. 50 B. 125 C. 175 D. 250