If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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"People who have dental insurance don't floss often enough." This is an example of
A) asymmetric information. B) bad parenting. C) moral hazard. D) risk adverse behavior
If the Fed wanted to decrease the money supply, one way to make an enormous impact would be to:
A. decrease the reserve requirement, which would increase the money multiplier. B. increase the reserve requirement, which would decrease the money multiplier. C. increase the reserve requirement, which would increase the money multiplier. D. decrease the reserve requirement, which would decrease the money multiplier.