Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________
A) before; easy
B) before; costly
C) after; easy
D) after; costly
D
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A weaker peso, relative to the US dollar, causes the demand for US exports to Mexico to______ and the demand for US imports from Mexico to______
a. Increase; Decrease b. Decrease; Increase c. Increase; Increase d. Decrease; Decrease
Credit risk is:
a. The chance of a change in the market value of a security due to changes in macroeconomic variables, such as interest rates or exchange rates. b. The risk that credit cannot be expanded by the banking system due to central bank regulations. c. The chance that you will not be able to get a credit card when you really need it. d. The chance that borrowers will be unable or unwilling to repay their debts. e. The chance that a company will not be able to get a loan (i.e., credit) when it needs funding.
Suppose the marginal propensity to consume is 0.8. According to the model in the text, how much would equilibrium output go up if the government increased spending by $500 million (assuming all other factors are held constant)?
Select one: a. $400 million b. $625 million c. $900 million d. $2,500 million
Economists use some familiar terms in specialized ways
a. to make the subject sound more complex than it is. b. because every respectable field of study has its own language. c. to provide a new and useful way of thinking about the world. d. because it was too difficult to come up with new terms.