Which of the following is the most likely cause of a recession according to classical and new classical models?
a. government policy.
b. unstable expectations.
c. a fall in expected profits.
d. an anticipated change in the money supply.
e. none of the above.
A
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Adverse selection can occur if:
a. high-risk persons insure themselves more heavily than low-risk persons. b. high-risk persons claim coverage which cannot be borne by the insurers. c. high-risk persons do not conceal information from the insurer. d. high-risk persons make an effort to take less risk in the presence of an insurance cover.
The advantages of emissions permits over taxes is/are:
a. it reduces undertainty about the quantity of pollution that will be emitted. b. environmental authorities decide on an emissions ceiling in advance of issuing permits. c. pollutants can be limited to levels which do not affect health. d. All of the above are correct.
Which of the following is an example of shoe-leather cost?
a. Diane has to shut down her supermarket for a day in order to change the prices on everything. b. Viktor has to pay a value added tax on raw materials that he is manufacturing into goods for resale. c. Zara has to calculate the depreciation of each of the goods in her office each year. d. Ishmael goes to the ATM twice a week because consumer prices have been fluctuating so rapidly.
A classical model of the economy predicts
A. a negative unemployment rate whenever the economy is in equilibrium. B. full employment in the long run. C. cyclical changes in the unemployment rate. D. the same unemployment rates as the Keynesian model.