The right decision about what to produce and who to trade with happens:
A. governments from different countries get together to decide on trade.
B. only after firms research the cost of inputs such as labor and raw materials, and the sale prices of different goods you could produce, and calculate the most profitable option.
C. almost entirely by market decisions automatically.
D. when governments publish comparative advantage numbers.
Answer: B
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__________ occurs because firm owners have an incentive to understate their true riskiness to borrow on a more favorable basis
A) Moral hazard B) Adverse selection C) Manager-stockholder conflict D) Manager-lender conflict
One intention of deposit insurance is to reduce the danger of
a. excess lending. b. excess profits. c. risky lending. d. bank runs. e. All of the above are correct.
Which of the following provides the best explanation for diseconomies of scale?
A. Reduced monitoring costs B. The presence of fixed inputs C. Indivisible setup costs D. Loss of team spirit
If Abercrombie & Fitch borrows $8 million from a bank to finance the construction of a new store, this is an example of
A) a stock market transaction. B) direct finance. C) a bond market transaction. D) indirect finance.