When the government provides loan guarantees and in effect "socializes losses and privatizes gains" of a project or firm, it can lead to a
What will be an ideal response?
moral hazard problem among investors.
You might also like to view...
Joan's income has just risen from $940 per week to $1,060 per week. As a result, she decides to purchase 12 percent more lettuce per week. The income elasticity of Joan's demand for lettuce is
A) 0.75. B) 0.90. C) 1.00. D) 1.33.
Ingrid has been waiting for the show "Mamma Mia!" to come to town. When it finally does come, tickets cost $60. Ingrid's reservation price is $75. But when Ingrid tries to buy a ticket, they are sold out. Suppose Steven was able to purchase a ticket at the box office for $60. Steven's reservation price for the ticket is $65. If Steven attends "Mamma Mia!" and Ingrid does not, then this situation is:
A. efficient because Steven arrived at the ticket counter before the show was sold out. B. inefficient because Ingrid would have enjoyed the show too. C. efficient because Steven paid less for the ticket than his reservation price. D. inefficient because Steven and Ingrid could have made a mutually beneficial trade.
A monopoly that results from economies of scale is called a(n):
A. large-scale monopolist. B. natural monopoly. C. antitrust violator. D. cost-plus firm.
Which of the following causes a rightward shift of the short-run aggregate supply (SRAS) curve?
A. an increase in the overall price level B. a reduction in the price of a raw material C. an increase in the wage rate D. a decrease in firms' production with more inputs