Assume that 50 percent of the population consisting of 2,000 low-risk people and 1,000 high-risk people choose a comprehensive health insurance plan having a break even premium of $800 . The remaining 50 percent, also consisting of 2,000 low-risk people and 1,000 high-risk people, choose a Health Maintenance Organization plan having a break even premium of $400 . If high-risk people submit claims
worth $2,000 under the comprehensive plan and $1,000 under the HMO plan, which of the following situations will occur?
a. High-risk people will shift to the comprehensive plan resulting in an increase in its premium rate.
b. High-risk people will shift to the HMO plan resulting into a fall in its premium rate.
c. Low-risk people will shift to the comprehensive plan resulting in a substantial decrease in its premium rate.
d. Low-risk people in both groups will stick to their respective plans and minimize their losses.
A
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The legal requirement that commercial banks hold reserves equal to some fraction of their deposits
a. limits the ability of banks to expand the money supply by extending additional loans. b. prevents the Fed from controlling the money supply since commercial banks can always offset the actions of the Fed. c. prevents runs on banks by depositors who fear that banks have insufficient assets to meet the claims of their depositors. d. limits the ability of the Treasury to expand the national debt.
Figure 11-6
The profit-maximizing monopolist in Figure 11-6 will sell its output at
a.
P1.
b.
P2.
c.
P3.
d.
P4.
With respect to events like global warming some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future. B) exponential discounting weights (large) costs incurred far into the future heavily. C) events far in the future do not affect us. D) we should not care about costs far in the future.
Historically, the total amount of real capital per worker in the United States has:
A. Provided financing for the industrial expansion of business B. Increased significantly and made labor more productive C. Been the single most important determinant of economic growth D. Remained relatively constant, although the quality of capital has improved dramatically