Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer. According to economic analysis, how would this information affect the market for alcohol?
a. Demand will increase, placing upward pressure on price.
b. Supply will decrease, placing downward pressure on price.
c. Demand will decrease, placing downward pressure on price.
d. Supply will increase, placing upward pressure on price.
C
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A bond is selling for $1000 and it pays $150 in interest a year. If the interest rate changes to 20 percent, then
A) the price of the bond falls to $750. B) the interest payment falls to $75. C) the interest payment rises to $200. D) the price of the bond rises to $1500.
What determines the supply of loanable funds and what makes it change?
What will be an ideal response?
A deposit outflow results in equal reductions in
A) loans and reserves. B) assets and liabilities. C) reserves and capital. D) assets and capital.
The government can help solve the information asymmetry problem by:
A. making markets illegal where information asymmetry is significant. B. requiring the more informed party to reveal the missing information. C. excluding those who do not have complete information from the market. D. telling less-informed parties not to participate in the market.