Suppose Sally buys a Volvo because they are safe and, as a result, drives faster and pays less attention to other cars on the road. This is an example of
a. the winner's curse
b. a positive externality
c. irrational behavior
d. moral hazard
e. adverse selection
D
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To maintain a fixed exchange rate, a central bank
a. must buy up any excess supply of its currency at that rate b. must buy up any excess demand for its currency at that rate c. must maintain a fixed money supply d. must also maintain a fixed interest rate target e. should "buy low and sell high"
By far the largest category of goods and services in the CPI basket is
a. housing. b. transportation. c. education & communication. d. food & beverages.
An ideal voting system must not have:
A. a one-dimensional issue being voted on. B. a person who has the power to single-handedly enact his or her own preferences. C. a person who can convince everyone to vote for his or her preferences, and not their own. D. transitivity of preferences
Assume that both the United States and Germany produce beef and computers. The U.S. can produce 200 computers or 1,000 pounds of beef per day. Germany can produce 500 computers or 250 pounds of beef per day. What is the opportunity cost of beef and computer chips in each country? In which good does each country have a comparative advantage? What is the range for mutually beneficial trade in
computers? What will be an ideal response?