The law of demand says that as the price of a good rises,
a. buyers recognize that price may be even higher in the future, and so they buy now
b. buyers purchase less in hopes that the price will fall in the future
c. buyers purchase less, in part because their real income has fallen
d. buyers purchase more, in part because the price of a substitute has risen
e. buyers purchase more, in part because it has higher status at a higher price
C
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In the two-period model with asymmetric information, a one-unit increase in the real rate of interest on bank deposits
A) causes the real loan interest rate to increase by more than one unit. B) causes the real loan interest rate to increase by less than one unit. C) cause the real loan interest rate to decrease by less than one unit. D) causes the real loan interest rate to decrease by more than one unit.
To decrease anxiety in its most accomplished teachers, a school decides to offer them tenure, to help them concentrate on teaching better. Instead it notices that even the best of the teachers started to get sloppy with their work. The school did not foresee
a. Adverse selection b. Moral hazard c. All of the above d. None of the above