According to the rational inattention theory, during the periods between informational updates
A. firms always change product prices more than the inflation rate.
B. firms fail to fully adjust product prices.
C. firms change the wages of their employees but keep product prices unchanged.
D. firms fully adjust product prices.
Answer: B
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The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total producer surplus equals
A) $0. B) $60. C) $90. D) $120. E) None of the above answers is correct.
If you write a check on your checking account to pay your rent which your landlord deposits in a bank, then
a. the monetary base and the money supply will fall. b. the monetary base falls but the money supply remains unchanged. c. there is no change in the monetary base or the money supply. d. the monetary base and the money supply will rise.
Which of the following statements is consistent with an increase in supply?
A) The price of labor input has increased. B) There has been an advance in technology. C) Consumers' incomes have increased. D) The market price has decreased.
Monitoring
a. Gives the principle a better performance evaluation metric b. Allows the principle to better align the incentives of the agent with the goals of the principle c. Can be costly for the principal d. All of the above