Information problems create inefficient outcomes in:
A. the private sector but not the public sector.
B. the public sector but not the private sector.
C. neither the private nor the public sector.
D. both the private and the public sectors.
Answer: D
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A) moves the AA curve to the right. B) moves the AA curve to the left. C) leaves the AA curve unchanged. D) moves the DD curve to the right. E) moves the DD curve to the left.
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A) signals that potential output is about to increase B) is not possible C) results from an economic shock to which the economy has yet to adjust fully D) occurs near the trough, rather than the peak, of a business cycle E) none of the above
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