Which of the following describes a moral hazard problem?
A. a contractual problem that results because monopolies exist in all economies
B. a post-contractual problem that may result because participants to the exchange process have information that allows them to act in an opportunistic manner
C. a process by which individuals have substantial resources devoted to the exchange process and need to make a profit or they will be adversely affected
D. a process by which individual buyers or sellers with better information are more likely to participate in voluntary exchange
Answer: B
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Which of the following is the most likely explanation for the behavior of private inventories between September 2007 and September 2009, as depicted in Figure 19.1?
A) a substantial decline in the desired level of inventories, due to a slump in aggregate demand B) a substantial decline in the desired level of inventories, as improvements in technology have reduced the size of inventories needed to support both production and customer deliveries C) an unanticipated draw-down of inventories as the economy was growing much faster than expected D) a substantial decline in the desired level of inventories, as changes in the tax code increased the cost of holding inventories
A continuous decrease in the level of prices over time is called ________.
A) deflation B) inflation C) disinflation D) deflection E) depression
Refer to the graph shown. A perfectly competitive firm would never operate if the price dropped to which segment of the marginal cost curve?
A. DE. B. CD. C. AC. D. CE.
The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the:
A. National Monetary Commission. B. Federal Open Market Committee. C. Federal Reserve System. D. Board of Governors.