Lemon laws __________ the __________ problem in the used car market.
A. are meant to reduce; adverse selection
B. are meant to reduce; moral hazard
C. unintentionally worsen; adverse selection
D. unintentionally worsen; moral hazard
Answer: A
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When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers
a. True b. False Indicate whether the statement is true or false
The ATC curve is __________ and the AVC curve is __________.
A. U-shaped; U-shaped B. not U-shaped; not U-shaped C. U-shaped; not U-shaped D. not U-shaped; U-shaped
Which of the following situations would be considered a money leakage?
a) A bank holding only the minimum required reserves. b) A business that refuses to accept cash and handles all transactions using credit cards. c) A senior citizen who keeps her retirement savings in a shoe box underneath her bed. d) A college student who never carries any cash.
Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to
a. decrease consumption, which shifts aggregate supply left. b. decrease consumption, which shifts aggregate demand left. c. decrease investment, which shifts aggregate demand left. d. decrease investment, which shifts aggregate demand right.