The possibility that a borrower might engage in riskier behavior after a loan has been obtained is
A. financial intermediation.
B. adverse selection.
C. moral hazard.
D. asymmetric information.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
A perfectly competitive firm is a price taker because
A) many other firms produce the same product. B) only one firm produces the product. C) many firms produce a slightly differentiated product. D) a few firms compete. E) it faces a vertical demand curve.
Which of the following is not true about The American Recovery and Reinvestment Act of 2009:
A. it included tax cuts. B. it is more commonly known as the "stimulus plan." C. it Increased government spending. D. It privatized social security system.
Large income differences will be eradicated if the market mechanism is working well.
Answer the following statement true (T) or false (F)