Mechanism design is used to
A. give individuals the incentive to reveal the truth about themselves.
B. align the interests of two parties in a transaction.
C. correct inefficiencies associated with asymmetric information.
D. All of the above are correct.
Answer: D
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If the representative basket of European goods and services costs 40 euros, the representative U.S. basket costs $50, and the dollar/euro exchange rate is $0.90 per euro, then the price of the European basket in terms of U.S. basket is
A) [(0.9 $/euro) (40 euro per a European basket)]/[(50 $/U.S. basket)]. B) [(0.9 $/euro) (50 $/U.S. basket)]/[(40 euro per a European basket)]. C) [(40 euro per a European basket)]/[(50 $/U.S. basket) (0.9 $/euro)]. D) [(50 $/U.S. basket)]. E) [(0.9 $/euro) (40 euro per a European basket) (50 $ U.S. basket)].
The economic impact of a change in spending, working through the multiplier, takes effect
a. immediately. b. very quickly, with a small number of rounds of spending. c. after a very long period of time. d. after multiple rounds of spending occur.
Liquidity refers to the ability of an asset to hold its value in periods of inflation
a. True b. False Indicate whether the statement is true or false
Which of the following is a characteristic of an oligopolistic market? a. Firms sell homogeneous products
b. Firms enjoy unlimited market power. c. There is only one product. d. Decision making by firms is highly interdependent.