A rightward shift of the AD curve in the very steep upper part of the short-run AS curve will:
A. increase real output by more than the price level.
B. increase the price level by more than real output.
C. reduce real output by more than the price level.
D. reduce the price level by more than real output.
B. increase the price level by more than real output.
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You enter a store and buy a bottle of soda. Do you usually receive consumer surplus?
A) Yes, because you wouldn't buy the soda if your willingness to pay would be less than the price. B) Yes, because you are thirsty. C) No, because you value other drinks more. D) No, because you have less money after the transaction.
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet)
What is the source of the asymmetric information problem in this case? A) The bank has more information about the true cost of the corporate jet than the firm. B) The bank has more information about the opportunity cost of the loaned funds. C) The firm has more information about the actual use of the funds than the bank. D) The firm has more information about the interest rate on the loan than the bank.