Each member in a group might do what's best for himself or herself instead of behaving in a way that optimizes the well-being of the entire group. This gives rise to the problem of:
A) Pareto inefficiency.
B) free riding.
C) irrational behavior.
D) disequilibrium.
Question 2
Suppose Stan transfers 1,000 from his savings account into his checking account. What are the effects on M1 and M2 money supply?
A) M1 increases; M2 remains the same.
B) M1 decreases; M2 increases.
C) Both M1 and M2 increase.
D) Both M1 and M2 decrease.
E) Both M1 and M2 remain the same.
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