One result of asymmetric information in the market for used cars is that few lemons are sold
a. True
b. False
B
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Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. If the economy's present aggregate demand curve is AD2,
A. the most appropriate fiscal policy is a reduction in government purchases or an increase of taxes. B. the most appropriate fiscal policy is an increase in government purchases or a reduction of taxes. C. the government should undertake neither an expansionary nor a contractionary fiscal policy. D. the economy is achieving its maximum possible output.
Purchasing-power parity describes the forces that determine
a. prices in the short run. b. prices in the long run. c. exchange rates in the short run. d. exchange rates in the long run.
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, in the production range of 1 to 2 combs the opportunity cost of producing 1 more comb in terms of brushes is
A. 4. B. 1/2. C. 1/7. D. 2/17.
When the relative prices of U.S.-manufactured goods go up, the result is
A. a decrease in exports. B. an increase in exports. C. a decrease in imports. D. no net change in imports or exports.