When banks and other financial institutions become insolvent, ________
A) the problem of asymmetric information becomes more acute
B) it is easier to distinguish the good creditors and borrowers from the bad
C) surviving creditors will attract borrower-spenders by lowering the real interest rate
D) the resulting increase in short-run aggregate supply will discourage investment
A
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A production possibilities curve always slopes downward to the right because resources
a. are not scarce. b. have no opportunity cost. c. are freely available. d. are limited. e. are not related to outputs.
To correct for the social impact of pollution, the government should levy a per-unit tax
A) that is the same for all polluters regardless of their locations or sizes. B) according to the economic damage of the pollution. C) according to the business activity of the polluter. D) only to those polluters that can afford to pay for the tax.