Requiring that borrowers put up collateral to obtain a loan is a tool designed to treat:
A. the lemons problem.
B. the free-rider problem.
C. the problem of moral hazard.
D. the problem of adverse selection.
Answer: C
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The ________ of something is the gain or pleasure that it brings
A) rational margin B) marginal cost C) benefit D) opportunity cost E) rational choice
In the short run, the firm makes zero economic profit when the price is ________ minimum average total cost, makes an economic profit when the price is ________ minimum average total cost, and incurs an economic loss when the price is ________
minimum average total cost. A) equal to; higher than; lower than B) equal to; lower than; higher than C) higher than; equal to; lower than D) lower than; equal to; higher than
Whenever government spending is a substitute for private spending
A) interest rates will rise. B) the Ricardian equivalence theorem holds. C) the effects of expansionary fiscal policy are dampened. D) there is a direct multiplier effect.
The learning curve suggests that an individual will
A) receive the same income throughout a career. B) gain experience and increase productivity over time. C) be subject to frequent spells of unemployment. D) have an income that falls over time.