The "lemons problem" in the used car market arises from
A) the difficulty U.S. producers have in making reliable cars.
B) the difficulty buyers have in distinguishing good cars from lemons.
C) the tendency of buyers of used cars to pay for them with bad checks.
D) the reluctance of many car dealers to handle used cars.
B
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What is the main difference between common and preferred stocks?
a. Common stocks pay interest whereas preferred stocks pay dividends. b. Preferred stocks carry voting rights whereas common stocks do not carry voting rights. c. Preferred stocks pay a guaranteed dividend, while common stocks may or may not pay dividends. d. In case of bankruptcy, preferred stockholders have a right to the company's asset, whereas common stockholders do not have such rights. e. Common stocks can be converted into preferred stocks while preferred stocks cannot be converted into common stocks.
In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPC is 0.6, then it would increase government purchases by
A. $31.25 billion. B. $10 billion. C. $20 billion. D. $40.50 billion.