Because of ________, the market will provide ________ the socially optimal level of information.
A. the problem of adverse selection; less
B. moral hazard; more
C. the credibility problem; more
D. the free-rider problem; less
Answer: D
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Pollution is a cost because it entails the sacrifice of valued opportunities
A) and because the process of creating it confers no benefits on the members of society. B) for some people. C) and reduces the net welfare of society. D) which makes everyone worse off in the long run.
The Solow model suggests that economies with the same aggregate production function, ratio of workers to the total population and saving rates will ________
A) trade with one another B) start with different initial levels of per capita income C) possess the same rate of depreciation D) experience convergence
"Crowding out" refers to federal government deficits financed by:
a. borrowing which increases interest rates and thereby reduces private spending. b. increasing taxes which reduces private spending. c. the federal government buying foreign debt which reduces the amount of government spending and government programs. d. reducing government spending which reduces interest rates.
The debt-to-GDP ratio is higher,
A) the lower the real interest rate. B) the lower is the ratio of the primary deficit to GDP. C) the higher is the growth rate of output. D) all of the above E) none of the above