If the seller knows more about the good than the buyer knows, there exists:
A. an externality.
B. asymmetric information.
C. moral hazard.
D. a public goods problem.
Answer: B
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Refer to the Article Summary. In 2015, the European Union initiated the BRRD program, where the burden of bailing out troubled banks is being placed on bank creditors, shareholders, and possibly depositors
If this program were to confiscate funds from bank deposits to assist troubled banks, the possibility of a bank run, a situation in which ________, would likely increase. A) a majority of the shareholders in a bank decide to sell off all their shares of stock. B) many depositors simultaneously decide to withdraw money from a bank. C) a bank stops paying interest on all of its interest-bearing accounts. D) a majority of the bank's loans go into default all at once.
In the IS-MP model, when the Fed increases the real interest rate
A) the MP curve shifts up resulting in a decline in the output gap. B) the MP curve shifts up resulting in an increase in the output gap. C) the MP curve shifts down resulting in a decline in the output gap. D) the MP curve shifts down resulting in an increase in the output gap.
In economic models of the public sector, the median voter model presents an extreme view of the way that the public sector allocates resources
a. True b. False
If the market for bottled spring water is characterized by a very elastic supply curve and a very inelastic demand curve, an outward shift in the supply curve would be reflected primarily in the form of
a. higher prices. b. higher output. c. lower prices. d. lower output.