Moral hazard is a problem in providing deposit insurance because insured banks are
A) more likely to make bookkeeping errors.
B) overly cautious due to extra regulations adopted by the FDIC.
C) more likely to provide bank managers with lavish perquisites.
D) encouraged to take on more risk.
D
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Expected real interest rates are the
A) interest rates quoted in the market plus the expected inflation rate. B) interest rates quoted in the market. C) expectations of future interest rates. D) interest rates quoted in the market minus the expected inflation rate.
Harvey Miller owns a baseball that was hit for a home run by Ted Williams
Harvey, a long-time Boston Red Sox fan, recently refused to sell his baseball for $75,000 even though he would not have paid someone more than $10,000 for the baseball if he did not already own it. Harvey explained his decision not to sell the baseball by noting that: "Ted Williams was my hero. This baseball has a great deal of sentimental value for me." Which of the following can explain Harvey's behavior? A) how social influences can affect consumption choices B) the difference between implicit and explicit costs C) the endowment effect D) the scarcity of home run baseballs hit by Ted Williams
Your best friend calls and gives you the latest stock market "hot tip" that he heard at the health club. Should you act on this information? Why or why not?
What will be an ideal response?
In a constant cost industry:
a. a natural monopoly is likely to occur. b. total cost is the same, no matter how much a firm produces. c. the long-run supply curve will be perfectly elastic. d. entry of new firms in the industry will lead to a reduction in the cost of inputs.