Because of the problem of adverse selection,
A. everyone is typically charged a lower premium.
B. low-risk individuals may have a hard time finding insurance worth buying.
C. high-risk individuals may have a hard time finding insurance worth buying.
D. individuals who buy insurance act more recklessly.
Answer: B
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If the Fed makes the quantity of money grow at the same rate as the growth rate of real GDP and velocity does not change, in the long run what happens to the price level and the inflation rate?
What will be an ideal response?
Suppose that in a perfectly competitive market, firms are making economic profits. In the long run, we can expect to see:
a. some firms leave. b. the market price rise. c. market supply shift to the left. d. economic profits become zero. e. production levels remaining the same as in the short-run.
The indirect effect of an increase in the money supply is to
A. lower interest rates, which stimulates both investment and consumption spending. B. pay off a portion of the public debt. C. put more cash in people's pockets, thereby increasing aggregate demand. D. raise interest rates so people will save more.
Screening and signaling in the labor market are inefficient
A) unless college costs are relatively low. B) unless they result in a better job match. C) because the benefits are spread out over many firms. D) because they raise the wage paid to all workers.