Al's Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company, which uses the aluminum to make aluminum foil. Shiny Foil Company sells $4 million worth of aluminum foil to households. The transactions just described contribute how much to GDP?
a. $1 million
b. $3 million
c. $4 million
d. $5 million
c
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
An increase in the marginal product of capital shifts the
A) supply of capital curve rightward. B) supply of capital curve leftward. C) demand for capital curve rightward. D) demand for capital curve leftward.
The most direct and important consequence of an increase in asymmetric information problems is ________
A) a decrease in the probability of loan repayment B) inability to assess the probability of loan repayment C) unwillingness of borrowers to accept the market rate of interest D) inability of creditors to acquire enough funds to meet borrowers' demand
The tendency for the poorest risks to buy health insurance and the tendency of the insured to take more risks with their health are known as moral hazard and adverse selection, respectively
a. True b. False