Assume that both high and low quality appliances are sold in the used appliance market. If we assume asymmetric information with sellers having more information regarding quality than buyers, which of the following is necessarily true? The
A) fraction of high quality appliances will be greater than under perfect knowledge.
B) fractions of high and low quality appliances will be the same as with perfect information.
C) fraction of high quality appliances will be less than with perfect information.
D) none of the above
C
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A falling interest rate ________ the number of investment projects having a positive profit rate, and thus ________ the amount of output that firms demand for themselves
A) increases, raises B) increases, lowers C) decreases, raises D) decreases, lower
Equilibrium in the loanable funds market is initially present at a stable price level (zero inflation) and a nominal (and real) interest rate of 4 percent. If a shift to expansionary monetary policy eventually leads to actual and expected inflation of 6 percent,
a. both the nominal and real interest rates will rise to 10 percent. b. the nominal interest rate will rise to 10 percent, but the real interest rate will remain at 4 percent. c. the real interest rate will rise to 10 percent, but the nominal interest rate will remain at 4 percent. d. both the real and nominal interest rates will remain at 4 percent.
In a union shop
A. no one is forced to join the union. B. an employer may hire only union members. C. all employees must join the union, usually within 30 days after they are hired.
When a foreign resident increases her holdings of a U.S. financial asset, the
A. financial account of the U.S. balance of payments will be debited. B. financial account of the U.S. balance of payments will be credited. C. current account of the U.S. balance of payments will be credited. D. current account of the U.S. balance of payments will be debited.