Hold-up problems usually occur when
a. One of the parties makes a heavy investment in equipment specific to its trading partner
b. One of the firms decides to invest heavily in general purpose equipment
c. Costs are avoidable
d. Costs are incurred
a
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Velocity can be computed with the formula
a. (Annual spending)/(Money supply). b. (Annual income)/(Annual spending). c. (Average income)/(Average spending). d. (Money supply)/(Average income).
Public choice analysis suggests that bureaucrats and public-sector managers have a strong incentive to
a. economize on their spending so more funds will be available for other government programs. b. ensure that their budget is exactly the size that would be considered economically efficient. c. expand their budgets to sizes beyond what would be considered economically efficient. d. keep individual legislators fully informed as to every expenditure.