How does a government budget surplus or deficit influence the loanable funds market?
What will be an ideal response?
A government budget surplus adds to the supply of loanable funds. A government budget deficit adds to the demand for loanable funds.
Economics
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If a natural monopoly is regulated using the marginal cost pricing rule, how will that affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?
What will be an ideal response?
Economics
Adverse selection in insurance requires that
a. all people face the same risk b. potential customers facing more risk are more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people
Economics