Which of the following are the messengers in a market economy, conveying information about conditions of demand and supply?
a. interest rates
b. surpluses
c. shortages
d. prices
d. prices
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If a life insurance company offers coverage regardless of age, health status, or smoking history, it is likely to suffer
A) moral hazard problems. B) adverse selection problems. C) lower costs. D) low demand for its product.
In the Keynesian model, a Federal Reserve sale of government securities in the open market will
a. raise the level of income and lower the interest rate. b. raise the level of income and raise the interest rate. c. lower the level of income and the interest rate. d. lower the level of income and raise the interest rate.
According to the Ricardian equivalence theorem, people increase savings today when the government increases deficits because they recognize that:
A. consumption increases future taxes. B. government deficits imply higher future taxes. C. government deficits imply lower future taxes. D. consumption reduces future taxes.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A. only hybrid cars being produced. B. an unattainable production point. C. what society wants. D. the economy's optimal production point.