Moral hazard occurs when:
a. Individuals and institutions do not bear the full cost of their own mistakes.
b.Individuals and institutions make immoral decisions based on greed.
c. General social decay leads to unethical business decisions.
d. Warning lights for potential economic hazards are ignored.
e. All of the above are examples of moral hazard.
Question 2 - Which of the following causes the aggregate supply curve to rise?
a. An increase in a nation's level of productivity.
b. A decrease in input prices.
c. An increase in the value of the domestic currency.
d. All of these answers are correct.
Question 3 - The commercial paper market was an important ingredient for the Great Recession because:
a. It is the market on which mortgages are financed, and, due to the Great Recession, this market dried up.
b. It is the market on which many companies finance their daily working capital needs and, due to the Great Recession, this market dried up.
c. The commercial paper market was the only financing source open to companies during the great recession.
d. All of the above.
Question 4 - Which of the following effects will not increase (i.e., shift to the right) the aggregate supply curve?
a. An increase in the average national price level.
b. An appreciation of the domestic currency.
c. An increase in the number of immigrants.
d. All of these answers are correct.
e. None of these answers are correct.
Question 5 - Interest rates in the United States were low for an extended period after the recession of 2001 . Many cite these low levels as a major reason for fueling housing speculation that caused the Great Recession. Which of the following was a cause of low interest rates in the United States?
a. Loose monetary policies by the Federal Reserve.
b.Muted inflationary expectations.
c. Strong capital inflows from foreign countries with high saving rates.
d. All of the above.
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