Many people believe that the supply and demand for regulation in an industry often results in the creation of a powerful coalition group controlling the regulatory body. That powerful group often comprises of executives from the same industry that is supposed to be regulated. This is called:
A. capturing.
B. internalization of externalities.
C. adverse selection.
D. free-riding.
Answer: A
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Which of the following activities describes the opportunity cost of attending an economics class?
a. the value of the time it takes to get to campus every day b. the cost of the gasoline needed to drive a car to campus c. the value of the highest valued alternative that must be forgone because of attending the class d. transportation costs plus the cost of tuition and textbooks for the course
Katz, Goborg, and Rimmet are oligopolists in the tractor industry. They face intense pressure from foreign tractor imports. Which of the following actions could be considered collusive?
a. Goborg and Rimmet collaborate on a pricing strategy to boost their sales. b. Katz hires lobbyists to convince the government to raise tariffs on imported tractors. c. Rimmet and Goborg each lower their prices after Katz lowers its prices. d. Goborg deliberately lowers its prices to try to steal customers from Rimmet and Katz.
To arrive at a complete theory of exchange rate determination, we use:
a. the short-run monetary approach, the long-run monetary approach, and a good dose of common sense. b. the short-run asset approach, the long-run monetary approach, and real interest parity. c. real-world phenomena such as sticky prices, government inefficiency, and imperfect markets. d. information on financial markets, political realities, and the large government debt.
The classical theory of the market concluded that the interest rate would equate _____ and _____.
Fill in the blank(s) with the appropriate word(s).