What is moral hazard?
A. Using prices to ration goods and services
B. Using waiting times to ration goods and services
C. The effect of higher incomes on the demand for care
D. The incentive, as a result of having insurance, to use additional care
D. The incentive, as a result of having insurance, to use additional care
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According to the short-run Phillips curve, if unemployment is 2.4% and inflation is 3.7%, a decrease in the inflation rate might result in which of the following?
A) an increase in the unemployment rate to 3.4% B) a decrease in the unemployment rate to 3.0% C) a decrease in the demand for labor in the economy D) Both A and C are correct answers.
The graph above shows the production possibilities curve for an economy producing two goods, X and Y. Which of the points on the graph indicate unemployed resources?
A. D only B. E and A only C. B and C only D. A, D, and E only
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Refer to the graphs and information below. It can be deduced that:
Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs below.
A. Greece has a comparative advantage in chemicals
B. Greece has the absolute advantage in both products
C. Italy has a comparative advantage in chemicals
D. It is more costly in terms of resources to produce steel in Italy