Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
If Candidate X is running for office against Candidate Z, then:
A. Candidate Z will win.
B. Candidate X might win.
C. all voters who would have voted for Y will vote for X.
D. all voters to the left of Z will vote for X, and all voters to the right of Z will vote for Z.
Answer: A
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According to economic theory, elected government officials will favor
A) federal budget surpluses. B) balanced federal budgets. C) federal budget deficits. D) shrinking federal budgets.
An increase in the interest rate will increase the demand for loanable funds
a. True b. False Indicate whether the statement is true or false
A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy. This requirement is an example of
a. signaling. b. screening. c. moral hazard. d. adverse selection.
Which of the following is correct?
a. Some bonds have terms as short as a few months. b. Because they are so risky, junk bonds pay a low rate of interest. c. Corporations buy bonds to raise funds. d. All of the above are correct.