The used car market may be inefficient because the purchase of a used car often involves
a. natural selection
b. moral hazard
c. hidden actions
d. open-access resources
e. hidden characteristics
E
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Disposable income equals:
a. Consumption minus saving b. Saving times consumption c. Consumption plus saving d. Saving divided by consumption
An increase in the nation's wealth, all other factors constant, would cause:
A. the bond supply curve to shift right. B. bond prices to rise and yields to decrease. C. bond prices and yields to increase. D. bond prices to fall and yields to increase.
Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point Z on the investment demand curve. Given these conditions, what policy should the monetary authorities pursue to achieve a noninflationary full-employment level of real GDP?
A. Decrease the reserve ratio
B. Decrease the discount rate
C. Sell government securities in the open market
D. Make no change in monetary policy
Which of the following is an example of an external benefit?
A. The federal government spends a million dollars on improving national parks. B. A firm has just gotten permission to open a landfill on property that is adjacent to your home. C. Firms are able to reduce their costs of production by using a more efficient technology. D. More people start to ride the bus because they become more public?spirited and, as a result, air pollution is reduced.