One result of adverse selection in the market for used cars is:
A. more lemons (low quality) may be offered for sale than plums (high quality).
B. more plums (high quality) may be offered for sale than lemons (low quality).
C. few lemons (low quality) are sold.
D. no used cars are sold.
Answer: A
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In a certain economy, the components of aggregate spending are given by: C = 500 + 0.8(Y - T) - 300rI = 200 - 400rG = 200NX = 10T = 150Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 6 percent is ________, and the eventual impact on short-run equilibrium output is ________.
A. an increase by 700 units; a decrease by 3,500 units. B. a decrease by 35 units, a decrease by 35 units. C. a decrease by 7 units, a decrease by 35 units. D. an increase by 35 units; a decrease by 175 units.
The level of long-run aggregate supply is affected by all of the following except
A) changes in the capital stock. B) changes in the number of workers. C) changes in the technology. D) changes in the price level.
Firms tend to raise the price of their goods after acquiring a firm that sells a substitute good because
a. They lose market power b. There is an increase in the overall demand for their products c. The bundle has a more elastic demand than individual goods d. The bundle has a more inelastic demand than individual goods
The sum of past federal budget deficits is the:
a. GDP debt. b. trade debt plus GDP. c. national debt. d. Congressional debt.