One reason for the controversy surrounding the decision by the European Central Bank to buy Greek bonds was that:
A) it may increase moral hazard by encouraging other European governments to issue more debt than private investors were willing to buy
B) it may increase adverse selection by encouraging other European governments to issue more debt than private investors were willing to buy
C) it may result in higher risk premiums as private investors anticipate a default by Greece
D) it may worsen the Greek recession by increasing Greek interest rates
A
You might also like to view...
Which of the following statements about the Supplemental Security Income (SSI) program is FALSE?
A) It is designed to establish nationwide minimum incomes for the aged, the blind, and the disabled B) Benefits are based on need. C) Recipients who receive benefit payments under Social Security are also eligible for SSI. D) It covers children and individuals with mental disabilities, including drug addicts and alcoholics.
The term "double coincidence of wants"
A. means that people are trying to purchase the same thing. B. is a situation where runaway prices are the result of printing too much money. C. describes a barter situation where individuals agree to trade commodities in amounts satisfactory to both parties. D. means that people with the same commodities agree to trade among themselves.
When an importing country compels the foreign exporting country to agree "voluntarily" to restrict its exports to this country, the exporting firms in the foreign country are worse off than they would be if the importing country had instead imposed a comparable import quota.
Answer the following statement true (T) or false (F)
Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1). If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the
consumers pay $.10, we can conclude that the: A. supply of X is highly inelastic. B. supply of X is highly elastic. C. demand for X is highly inelastic. D. demand for X is highly elastic.