While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth
a. True
b. False
Indicate whether the statement is true or false
False
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A $50 billion increase in both government spending and taxes will
A) increase GDP by less than $50 billion. B) not change the level of GDP. C) increase GDP by $50 billion. D) increase GDP by more than $50 billion.
If the nominal interest rate is 7 percent and the inflation rate is 1 percent, the real interest rate is approximately
A) 7 percent. B) 6 percent. C) 8 percent. D) -6 percent.
Economic rent is the sum of actual earning and transfer earning
a. True b. False Indicate whether the statement is true or false
Insurance companies charge annual premiums to collect revenue, which they then use to pay customers who file claims for damages they incur. As a result of the moral hazard problem (1) what is the effect on the percentage of policy holders making claims, and (2) what is the effect on the average premium charged when compared to a world with no moral hazard problem?
a. The percentage of policy holders making claims is higher; average annual premiums are lower. b. The percentage of policy holders making claims is lower; average annual premiums are lower. c. The percentage of policy holders making claims is higher; average annual premiums are higher. d. The percentage of policy holders making claims is lower; average annual premiums are higher.