Consider the market for consumer loans. A legal ceiling set below the market-clearing interest rate would tend to
A) increase the quantity demanded for loans.
B) decrease the quantity supplied of loans.
C) create a shortage of loans.
D) do all of the above.
E) do none of the above.
D
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Health insurance markets have a problem with insuring people who are "poor health risks" while many people who are "good health risks" do not buy insurance. This problem is an example of
A) market signaling. B) moral hazard. C) adverse selection. D) asymmetric information.
Behavioral economics:
A. draws on insights from psychology to expand models of individual decision making. B. draws on insights from anthropology to clarify models of individual decision making. C. draws on insights from business theory to expand models of household behavior. D. is the least disputed field of economics.
Other things equal, an increase in the equilibrium interest rate will:
A. increase R&D spending. B. rise when the supply of loanable funds increases. C. decrease purchases of capital goods and reduce R&D spending. D. increase bank lending.
The law of demand can be explained as:
A. a lot of people wanting the same thing. B. the higher the price, the smaller the quantity demanded, ceteris paribus. C. people are willing to make limited sacrifices to acquire products. D. legal reasons people make purchases in the marketplace.