An information cascade occurs when:
A) the buyer of a good has more information than the seller and takes hidden actions.
B) the seller of a good has more information about the hidden characteristics of the good.
C) people make the same decisions as others without focusing on private information.
D) people have contradictory information about a good they want to consume.
C
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If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then
A) marginal social benefit is equal to marginal social cost. B) the sum of consumer surplus and producer surplus is maximized. C) resources are being used efficiently. D) All of the above answers are correct.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions balance in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and current international transactions balance becomes more negative (or less positive). b. Real GDP rises and current international transactions balance becomes more negative (or less positive). c. Real GDP and current international transactions balance remain the same. d. Real GDP rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.