Adam Smith believed that the best way to promote the public interest was to
A. have the government produce most goods and services.
B. let people pursue their own selfish interests.
C. wait for individuals to set out to promote the public interest.
D. get rid of the price mechanism.
B. let people pursue their own selfish interests.
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Moral hazard typically occurs because
A) people are dishonest. B) agreements sometimes create incentives that are costly to monitor. C) workers possess diminishing marginal productivity. D) workers possess adverse selection.
Refer to Figure 3-2. A technological advancement would be represented by a movement from
A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says, "-1/4" this indicates that
A. the closing price for the bond on this particular day was $2.50 lower than on the previous day. B. the closing price for the bond on this particular day is $0.25 lower than on the previous day. C. the yield for the bond has fallen by 0.25% compared to the previous day. D. the yield for the bond has fallen by 0.25% compared to exactly one year ago.
When a central bank buys foreign assets,
A) its holdings of foreign assets rise by the amount of the purchase, but the monetary base is unaffected. B) its holdings of foreign assets and the monetary base rise by the amount of the purchase. C) its holdings of foreign assets rise by the amount of the purchase, and the monetary base rises by the amount of the purchase times the money multiplier. D) the monetary base falls by the amount of the purchase.