Which of the following actions best illustrates adverse selection?
a. A person adds risky stock to his portfolio.
b. A person who has narrowly avoided many accidents applies for automobile insurance.
c. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
d. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
b
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The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?
A) a shortage of 200 hours B) a shortage of 100 hours C) a surplus of 200 hours D) nothing because the minimum wage has no effect on the equilibrium price and quantity
The accelerator theory can explain the paradox that both interest rates and investment rise and fall in concert during the business cycle if
A) the effect of changes in Y effect on In dominate the effect of interest rates on investment. B) the LM curve is constant. C) the IS curve is constant. D) the effect of changes in interest rates on In dominate the effect of changes in Y on In.
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and the monetary base in the context of the Three-Sector-Model?
a. The quantity of real loanable funds rises and monetary base rises. b. The quantity of real loanable funds falls and monetary base rises. c. The quantity of real loanable funds falls and monetary base falls. d. The quantity of real loanable funds and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
From 2015 to 2016, the overall price level rose from 200 to 220. Over the same period, tuition rates at the local community college rose from $100 to $115 per credit hour. What can be concluded from the rise in tuition relative to overall inflation?
a. Tuition rates increased at the same rate as inflation. b. Tuition rates increased at a slower rate than inflation. c. Tuition rates increased at a faster rate than inflation. d. Tuition rates and inflation cannot be compared with the numbers given.