When the government provides loan guarantees and in effect "socializes losses and privatizes gains" of a project or firm, it can lead to a:
A. Moral hazard problem among investors
B. Regulatory capture problem
C. Principal-agent problem within the firm
D. Limited and bundled choice problem
A. Moral hazard problem among investors
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Decreases in consumption, investment, or net exports caused by an increase in government purchases are known as
A) strategic substitution. B) crowding out. C) diminishing returns. D) demand-side effects.
What effect does the age of a household have when estimating the degree of inequality in income among households?
What will be an ideal response?
Which of the following is NOT true when there are large economies of scale such that one firm can produce at a lower average cost than can be achieved by multiple firms?
A) This situation produces a natural monopoly. B) Proportional increases in output yield proportionally small increases in total cost. C) The long-run average cost curve of the firm will increase at a low level of output. D) There will only be one firm in this industry.
A firm deciding how many hours to hire can be represented:
A. with an individual labor-supply curve. B. in the market labor-supply curve. C. with an individual labor-demand curve. D. in the market labor-demand curve.