A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which problem banks face in lending?
A) adverse selection
B) moral hazard
C) interest rate risk
D) illiquidity
B
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In the year 2012, Shinzo Abe became prime minister of Japan, promising bold policies to improve Japan's economy. What was the focus of his policies and how did they affect Japan's trade position?
What will be an ideal response?
Suppose that a nation has a GDP of 1.0 trillion dollars in 2000. If a country grows at an average rate of 3.0 % per year over a fifteen year period, then its compounded GDP at the end of the 15 year period should be:
A. 1.47 Tr. B. 1.33 Tr. C. 2.00 Tr. D. 1.56 Tr.
Suppose that at the current level of output, price = $12, MC = $14, AVC = $7, and ATC = $9. Which of the following is TRUE?
A. The firm should decrease output. B. The firm should shut down. C. The firm should increase output. D. The firm should maintain the current level of output.
In well functioning markets, the degree of product variety reflects which of the following?
A. gains from coordination B. similar preferences in consumers' tastes C. cost diseconomies from standardization D. gains from network externalities