A borrower has information that is not available to a prospective lender; this is an example of:
A. liquidity risk.
B. a transfer of risk.
C. information asymmetry.
D. a wise borrower and an unwise lender.
Answer: C
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If there is an inflationary gap, what is the proper monetary policy to restore price stability? What actions can the Fed undertake to restore price stability?
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. Whether a tax is shifted forward or backward depends on the price elasticizes of demand and supply. 2. The effect of a tax is the same thing as the incidence of the tax. 3. A direct tax is one that cannot be shifted. 4. A flat tax is a form of sales tax. 5. Value-added tax rates in Europe usually range between 5 and 10 percent.
Economists use the term "demand" to refer to:
A. the total amount spent on a particular commodity over a stipulated time period. B. a particular price-quantity combination on a stable demand curve. C. an upsloping line on a graph that relates consumer purchases and product price. D. a schedule of various combinations of market prices and amounts demanded.
An oligopolistic firm finds that marginal revenue can range from $10 to $25 at an output level of 2500 units. This information would suggest that the oligopolistic model for this industry is most likely one of:
A. kinked demand. B. price leadership. C. cost-plus pricing. D. collusive pricing.