When you hire a company to paint your house, you cannot be sure of the quality of paint that was used. This situation is an example of
a. moral hazard.
b. the adverse selection problem.
c. the market for lemons.
d. the principal-agent problem.
d. the principal-agent problem.
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As the Indian rupee depreciates relative to the dollar, total spending on Indian goods and assets will increase. Therefore, in the foreign exchange market, the
A) supply curve of euros is downward sloping. B) supply curve of dollars is upward sloping. C) demand curve for euros is upward sloping. D) demand curve for dollars is upward sloping.
An increase in the marginal tax rate
A) decreases the expenditure multiplier but cannot make it negative. B) has no effect on the expenditure multiplier. C) can either increase or decrease the expenditure multiplier. D) increases the expenditure multiplier. E) decreases the expenditure multiplier and can make it negative.