A negative externality exists if
A) there are quantity controls in a market.
B) the marginal social cost of producing a good or service exceeds the private cost.
C) there are price controls in a market.
D) the marginal private cost of producing a good or service exceeds the social cost.
B
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An example of adverse selection is a. purchasing a new car sight unseen based on the recommendation of a neighbor. b. high health-insurance premiums resulting from the poor health of people who buy policies
c. suppliers who charge more for better quality clothing than for lower quality clothing. d. being talked into buying a low-quality item because the price is lower.
If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit
A. bounded rationality. B. completely irrational behavior. C. normative thinking. D. positive thinking.
Decreasing taxes during a recession is an example of
A. an automatic stabilizer. B. discretionary economic policy. C. policy lags. D. an automatic destabilizer.
The purpose of the IMF is to
a. make short-term loans to countries facing balance of payments problems b. help governments combat their inflation c. fix exchange rates d. administer the foreign exchange market e. buy and sell IMF bonds to keep the world's currencies in equilibrium