In a two-period model with default, the nation defaults on its debt in the current period if
A) the market interest rate is high, the cost of defaulting is low, and national debt is high.
B) the market interest rate is low, the cost of defaulting is low, and national debt is high.
C) the market interest rate is high, the cost of defaulting is high, and national debt is low.
D) the market interest rate is low, the cost of defaulting is high, and national debt is low.
A
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Compared to the U.S. production function, the European production function is
A) lower. B) the same. C) higher. D) lower than the U.S. production function at low levels of employment and higher than the U.S. production function at high levels of employment. E) higher than the U.S. production function at low levels of employment and lower than the U.S. production function at high levels of employment.
You have just read that Australia has suffered a drought, destroying its wheat crop for this year. The effect of this adverse supply shock on Australia would probably be
A) an increase in prices and an increase in real interest rates. B) an increase in prices, an increase in nominal interest rates, but a decrease in real interest rates. C) a decrease in prices and a decrease in real interest rates. D) a decrease in prices, a decrease in nominal interest rates, but an increase in real interest rates.
In the principal-agent problem, the agent is:
A. a person who entrusts someone with a task. B. a person who carries out a task on someone else's behalf. C. a person who is in charge of a top-secret mission. D. a person who has the same objectives as the principal.
Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from:
A. rising marginal costs. B. a perfectly elastic product demand curve. C. relatively easy entry. D. product differentiation and development.