When negative spending shocks occur, transfer payments automatically fall
a. True
b. False
B
You might also like to view...
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet)
What is the source of the asymmetric information problem in this case? A) The bank has more information about the true cost of the corporate jet than the firm. B) The bank has more information about the opportunity cost of the loaned funds. C) The firm has more information about the actual use of the funds than the bank. D) The firm has more information about the interest rate on the loan than the bank.
Which of the following market structures results in a deadweight loss in the long run?
a. Perfect competition and monopolistic competition b. Monopolistic competition and monopoly c. Perfect competition and monopoly d. All of these market structures lead to a deadweight loss in the long run
As the price level falls
a. people will want to buy more bonds, so the interest rate rises. b. people will want to buy fewer bonds, so the interest rate falls. c. people will want to buy more bonds, so the interest rate falls. d. people will want to buy fewer bonds, so the interest rate rises.
A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future consumer income will fall will all cause aggregate:
A. demand to shift rightward. B. demand to shift leftward. C. supply to shift rightward. D. supply to shift leftward.