People with a bad driving record find it difficult to buy automobile insurance because insurance companies fear that ________ may happen if they raise the premiums.
A. risk aversion
B. moral hazard
C. adverse selection
D. none of the statements associated with this question are correct
Answer: C
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Increasing the federal budget deficit will contribute to increasing the federal government debt
Indicate whether the statement is true or false
Which of the following is true of an expansionary gap? a. It develops when the expected price level exceeds the actual price level
b. In the long run, this gap will close when resource suppliers negotiate lower resource payments. c. It measures the amount by which actual output falls short of the economy's potential. d. In the long run, this gap will close when the short-run aggregate supply curve shifts rightward. e. In the long run, this gap will close when resource suppliers negotiate higher resource payments.
In the Friedman-Phelps analysis, when inflation is less than expected, the unemployment rate is less than the natural rate
a. True b. False Indicate whether the statement is true or false
The rate at which a consumer is ABLE to substitute one good for another is determined by
A. the marginal rate of substitution. B. the budget line C. the consumer's income. D. the indifference map.