Figure 9.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. Initially buyers believe that 80% of used cars in the market are lemons (low quality). Compared to the outcome with these initial expectations, how many fewer cars are sold in equilibrium?
A. 50
B. 80
C. 110
D. The number of cars sold in equilibrium is the same as the outcome with neutral expectations.
Answer: D
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If the balance on the current account in the United States is $750 billion, which of the following is most likely to be true?
A) The balance on the financial account is negative. B) The trade balance is negative. C) The balance on the capital account is positive. D) Net foreign investment is negative.
How might strict adherence to the Taylor rule discourage demand-pull inflation? How might demand-pull inflation occur, nonetheless?
What will be an ideal response?
Corporations often raise funds for business activities by the sale of shares of existing common stock.
Answer the following statement true (T) or false (F)
Which of the following statements is true?
a. The quantity of natural resources per worker can influence productivity. b. Technological knowledge and human capital are closely related. c. Over long periods of time, the prices of most natural resources are stable or falling, relative to other prices. d. All of the above are correct.