Which of the following describes a moral hazard problem?
A) a process by which individuals have substantial resources devoted to the exchange process and need to make a profit or they will be adversely affected
B) a process by which individual buyers or sellers with better information are more likely to participate in voluntary exchange
C) a contractual problem that results because monopolies exist in all economies
D) a post-contractual problem that may result because participants to the exchange process have information that allows them to act in an opportunistic manner
D
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"Increasing income tax rates will solve the Social Security time bomb issue" is an example of
A) business economic policy. B) a positive economic statement. C) marginal cost exceeding marginal benefit. D) answering the "how" question. E) globalization.
When the economy suffers a temporary negative supply shock and the monetary policy makers try to stabilize economic activity in the short run, then
A) aggregate demand curve shifts rightward. B) output will be at its potential. C) inflation rate will be higher. D) all of the above. E) both A and B.