Suppose that everyone is risk neutral and buyers cannot identify the lemons. The expected value of a used car is $8,000. No good cars will be sold in this market
A) unless the sellers of good cars place a value greater than $8,000 on their cars.
B) unless the sellers of lemons place a value greater than $8,000 on their cars.
C) unless sellers engage in cheap talk.
D) unless the sellers of good cars place a value lesser or equal to $8,000 on their cars.
D
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Indicate whether the statement is true or false
Other things equal, if planned investment spending is less than actual investment spending, then aggregate expenditure will be ________ real GDP and employment will ________
A) greater than; increase B) greater than; decrease C) less than; increase D) less than; decrease
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a. both consumption and investment will remain unchanged. b. consumption rises and investment falls. c. investment falls but consumption rises. d. both consumption and investment rises.
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