If aggregate demand increases and aggregate supply decreases, the price level:
A. will decrease, but real output may increase, decrease, or remain unchanged.
B. will increase, but real output may increase, decrease, or remain unchanged.
C. and real output will both increase.
D. and real output will both decrease.
B. will increase, but real output may increase, decrease, or remain unchanged.
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When the government places a tax on a product, the cost of the tax to buyers and sellers
a. is less than the revenue raised from the tax by the government. b. is equal to the revenue raised from the tax by the government. c. exceeds the revenue raised from the tax by the government. d. Without additional information, such as the elasticity of demand for this product, it is impossible to compare the cost of a tax to buyers and sellers with tax revenue.
Which of the following is not an example of an adverse selection problem?
a. A homeowner purchases a refrigerator that the seller knows has a history of leaking. b. A highly productive worker quits her job after a salary cut knowing that she can make more at a different job. c. A major league baseball player performs poorly in his second season after signing a multi-million dollar contract. d. A contractor uses low quality materials for construction but charges for higher quality materials.