The key to a successful positive signal is that:
A. it is hidden information.
B. it builds trust between the principal and the agent.
C. it is costly to fake.
D. All of these statements are true.
Answer: C
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Which of the following is a TRUE statement concerning economic growth?
A) Changes in per capita nominal GDP are used to measure economic growth, but there are serious problems concerning the desirability of using figures that do not account for pollution and urban sprawl. B) Changes in per capita real GDP are used to measure economic growth because inflation and population growth can distort nominal GDP figures or total GDP figures. C) Changes in per capita nominal GDP are used to measure economic growth because population growth can distort the figures and we want to use the nominal amounts since that is what people identify with. D) Changes in per capita real GDP are used to measure economic growth because this accurately measures all the differences in living standards across countries.
An increase in the money supply in the short run changes ___ , whereas in the long run, ___ change.
a. exchange rates; nominal interest rates b. price levels; interest rates c. interest rates; interest rates d. interest rates; inflation rates