Answer the following statement(s) true (T) or false (F)
1. Adverse selection can cause insurance companies to limit the amount of insurance they provide to people who are "poor risks."
2. Most economists believe adverse selection played no role in the 2008 financial crisis.
3. In the moral hazard problem, people incur additional risks as a result of being insured.
4. In the principal-agent problem, the principal is the person performing work and the agent is the one for whom the work is being done.
5. If employers had to pay higher than equilibrium wages to their workers, then workers would be better off but employers would be worse off.
1. False
2. False
3. True
4. False
5. False
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When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm
A) experiences positive technological change. B) will hire more workers in order to produce more output. C) experiences an increase in demand. D) is operating in the short run.
Keynesian theory
A. established the validity of Say's Law. B. Assumes that supply creates its own demand. C. is primarily demand-oriented. D. assigns much importance to aggregate supply and the average price level.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price floor of $9 will result in a
A. shortage of 12 units. B. surplus of 12 units. C. shortage of 30 units. D. surplus of 30 units.
Some claim that China's trade surpluses are created by currency undervaluation. Is this true? Explain
What will be an ideal response?