Externalities can be positive, as well as negative.
A. True
B. False
C. Uncertain
A. True
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Refer to Figure 3.1. Homer's dominant strategy is to ________ committing the crime, and Marge's dominant strategy is to ________ committing the crime
A) confess to; confess to B) confess to; deny C) deny; confess to D) deny; deny
The assumption of asymmetric information means that
A) borrowers and lenders have the same information. B) borrowers and lenders have perfect information. C) borrowers know more than lenders. D) lenders know more than borrowers.
Moral hazard:
A. is a normative judgement about the moral choices made by economic agents. B. is about actions and occurs after the parties have voluntarily entered into an agreement. C. is always present when adverse selection arises. D. All of these statements are true.
Suppose that you purchase a $5,000 bond that pays 7 percent interest annually and matures in five years. If you expect that the inflation rate during the next five years will be 2 percent annually, what real rate of return do you expect to earn?
a. 2 percent b. 5 percent c. 7 percent d. 9 percent