The choice between hawk and dove positions depends on
a. the extent of cyclical unemployment at the time of the decision
b. relative importance of short-run and long-run monetary considerations
c. cooperation between Congress and the monetary authorities
d. the frequency of negative supply shocks
e. the Fed's relative concern for price and employment stability
E
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If a country has a comparative advantage in the production of all goods, it should:
a. specialize in the production of goods with the lowest opportunity cost. b. specialize in the production of goods with the highest opportunity cost. c. specialize in the production of goods with the absolute advantage. d. specialize in the production of goods without the absolute advantage. e. not specialize at all and produce all the goods itself.
Answer the following questions true (T) or false (F)
1. One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no asymmetric information problems. 2. Due to adverse selection, very few lemons will be sold in the market for used cars. 3. The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction is known as asymmetric information.