If the Fed's credit policies induces banks to hold substantial excess reserves at the Fed, then
A. the scope of asymmetric-information problem for banks will improve.
B. financial markets will become more illiquid.
C. the money supply will rise.
D. the money multiplier will fall.
Answer: D
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Suppose that a currency's value is found to be overvalued by using purchasing power parity. Then
A) the currency will appreciate in the future but we don't know when. B) we know when and how much the currency will depreciate. C) the interest rate in the country will change in order to restore purchasing power parity. D) we know when and how much the currency will appreciate. E) the currency will depreciate in the future but we don't know when.
Most individual's income peaks when they are about
A) 30. B) 40. C) 50. D) 60.
Two common economic problems that may arise from asymmetric information are:
A. moral consequence and adverse selection. B. moral hazard and adverse selection. C. moral hazard and adverse decisions. D. moral consequence and adverse decisions.
In monopolistically competitive markets, economic profits ____, and ____ shifts the demand curve of the remaining firms to the ____
a. signal some remaining firms to exit; exit; right b. signal some remaining firms to exit; exit; left c. signal new firms to enter; entry; left d. signal new firms to enter; entry; right