Which of the following is adverse selection?
a. the risk associated with selecting stocks in only a few specific companies
b. the risk that a person will become overconfident in his ability to select stocks
c. a high-risk person being more likely to apply for insurance
d. after obtaining insurance a person having less incentive to be careful
c
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A $10,000 ten-year bond was issued at an interest rate of 6%. Carla is thinking about buying this bond one year before the end of the ten years, but interest rates are now 9%. What is the maximum amount that Carla should pay for this bond?
a. $9,174.31 b. $9,378.25 c. $8,982.43 d. $9, 764.20
When exchange rates are not in alignment, traders see opportunities for ___ , which move the rates ___ equilibrium.
a. speculation; away from b. arbitrage; toward c. investments; away from d. liquidation; toward
Long-run aggregate supply shocks are not a source of business cycle fluctuations in the ________, because ________
A) traditional Keynesian model; long-run supply shocks are incompatible with adaptive expectations B) traditional Keynesian model; demand fluctuations are considered of dominant importance C) real business cycle model; shocks cannot persist in the long run, when prices and wages are flexible D) new Keynesian model; such shocks are anticipated by forward-looking consumers and firms
A demand curve:
a. has a positive slope. b. illustrates the negative relationship between price and quantity demanded. c. illustrates the positive relationship between price and quantity demanded. d. is based on the assumption of a stable supply curve. e. shifts about in a random fashion.