A permanent increase in autonomous investment causes
A) a less than proportional increase in real Gross Domestic Product (GDP).
B) a more than proportional increase in real Gross Domestic Product (GDP).
C) an offsetting change in saving that leaves real Gross Domestic Product (GDP) at the same level.
D) a proportional increase in real Gross Domestic Product (GDP).
B
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What is adverse selection?
A) It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. B) It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off. C) It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus. D) It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.
The Coase Theorem does not imply which of the following?
a. Resources will be allocated efficiently in the absence of transactions costs. b. Resources will move to their highest valued use in there are no transactions costs. c. The initial allocation of property rights does not matter to the parties involved. d. The allocation of resources is independent of the assignment of property rights if transactions costs are zero.