What role does a company like J.D. Power (which provides product satisfaction reviews) serve?
A) It provides a screening test.
B) It provides a signal of quality.
C) It reduces moral hazard.
D) It reduces costs of giving surveys.
B
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If the cross-price elasticity of demand is -3, then
a. the goods are substitutes b. one good is price inelastic c. one good is an inferior good d. one good is a luxury good e. the goods are complements
If you win money in a casino you may be more likely to spend that money than your hard-earned cash. This is called:
a. compartmentalizing b. self control c. rule of thumb d. anchoring
A decrease in transfer payments works like a tax hike because it reduces the level of disposable income.
Answer the following statement true (T) or false (F)
At the end of 2008, the federal funds rate in the United States was close to zero. Which of the following is a major concern associated with such a low rate?
A) That traditional monetary policy will have no impact on the economy. B) Such a low rate spurs excessive consumption and investment spending which may lead to inflation. C) Such a low rate spurs excessive consumption and investment spending which may lead to deflation. D) Economic agents might be unwilling to borrow in anticipation of even lower interest rates.