When one party to a transaction has information that the other party does not have, they have a situation of:
a. asymmetrical information.
b. nondisclosure.
c. imperfect negotiation stances.
d. collateral warranty.
a. asymmetrical information.
A situation of asymmetric information is one where the parties involved in an economic transaction have an unequal amount of information (i.e., one party knows much more than the other).
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Gordon believes that the new Keynesian approach as opposed to other business cycle theories is preferred because
A) it explains information barriers and sticky wages. B) it explains how workers are "fooled." C) it explains wage and price stickiness assuming rational firms and workers. D) it identifies the source of supply side shocks and slow SAS adjustment.
The president is told that an inflationary gap must be closed but that consumers are increasing their spending on consumption and producers increasing their demand for investment goods. If the gap is to be closed, the President must
a. rely on reducing the price level b. resort to creating a deficit budget c. increase aggregate demand d. rely on increasing the price level e. resort to creating a surplus budget
In the theory of monopoly, which of the following is an exogenous variable?
a. The technology available to the monopoly. b. The price charged by the monopoly. c. The level of output produced by the monopoly. d. The profit earned by the monopoly.
Refer to Scenario 7.6 below to answer the question(s) that follow. SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually.Refer to Scenario 7.6. Your annual economic profit is
A. -$10,000. B. $20,000. C. $40,000. D. $70,000.