The existence of counterparty risk
A) has no effect on the contracting parties.
B) is disallowed under current government regulations.
C) results in information costs for buyers and sellers when analyzing the potential creditworthiness of potential trading partners.
D) reduces the risk introduced by forward contracts.
C
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Consumer surplus is equal to
A) marginal benefit minus price summed over the quantity consumed. B) price minus marginal benefit summed over the quantity consumed. C) marginal benefit summed over the quantity consumed. D) price multiplied by the quantity consumed. E) marginal benefit plus price summed over the quantity consumed.
If the Fed decides to increase interest rates to fight off potential inflation, and their policy action kept the inflation rate stable, then other things equal, this would result in
A) the IS curve shifting to the right. B) the IS curve shifting to the left. C) the MP curve shifting up. D) the MP curve shifting down.
Which of the following is not a characteristic of perfect competition?
a. A commodity product b. A large number of independently acting sellers c. Freedom of entry d. The existence of externalities e. Each firm is a price taker
Empirically, women who are married to a spouse who has access to health insurance earn higher wages and are less likely to be offered employer-sponsored health insurance than are married women whose spouse does not have access to health insurance. This pattern
A. supports the theory of compensating differentials as it indicates there is a trade-off between wages and benefits. B. supports the theory of compensating differentials as it indicates there is no trade-off between wages and benefits. C. fails to provide support for the theory of compensating differentials. D. contradicts the result that the hedonic wage function is upward sloping. E. is unexpected as wages should be unrelated to fringe benefits.