Which of the Following Was One of the Likely Causes

question 100

Multiple Choice

Which of the following was one of the likely causes of the productivity problem in the 1970s?

• A) a reduction in government regulation
• B) increased research and development spending
• C) an increase in investment spending
• D) low saving rates

---

Definitions:

Lemons Problem

A term in economics used to describe the issue of quality uncertainty in a market where sellers have more information about the product quality than buyers, leading to adverse selection.

Adverse Selection

A situation where asymmetric information leads to the selection of undesirable risks by one party in a transaction, often seen in insurance and financial markets.

Moral Hazard

When a party whose actions are unobserved can affect the probability or magnitude of a payment associated with an event.

Asymmetric Information

Asymmetric information exists when one party in a transaction has more or better information than the other, potentially leading to an imbalance in power or unfair outcomes.