One difference between moral hazard and adverse selection is
a. Moral hazard has to do with unobservable characteristics of individuals
b. Adverse selection has to do with unobservable actions of individuals
c. Adverse selection is when individuals change their behaviors because of a contract
d. Adverse selection is when you choose the wrong answer on a test
b
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Jacob buys less soda when the price of soda rises 10 percent, while the prices of all other goods also rise 10 percent. Jacob is
A) behaving in accordance with classical economic theory. B) worrying too much about a coming recession. C) suffering from money illusion. D) paying too much attention to changes in relative prices.
Which one of the following will cause velocity to increase?
A. Decreasing the interest rates B. Increasing the efficiency of the payments system C. Switching from weekly to monthly payroll checks D. Increasing the money supply