Suppose you are covered under health insurance or belong to a Health Maintenance Organization (HMO), and you are insured against all or most of the costs of visits to the doctor. As a result you are likely to make greater use of medical services of all kinds. This tendency of people with insurance to change their behavior in a way that leads to more claims against the insurance company is called
a. adverse selection.
b. moral hazard.
c. screening
d. signaling.
b
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The ________ the marginal propensity to import, the ________ the multiplier
A) larger; more negative B) larger; smaller C) smaller; smaller D) larger; larger E) None of the above is correct, because the expenditure multiplier is not related to the marginal propensity to import.
Keynes felt that the economic effects of business confidence, for example a loss confidence shifting the ________ curve to the left, were of ________ importance
A) IS, major B) IS, minor C) LM, major D) LM, minor
Because of fixed interest rates, there is no risk involved with holding corporate bonds
a. True b. False Indicate whether the statement is true or false
On November 7, 1996, the Distilled Spirits Council of the United States decided to end its voluntary ban on television and radio liquor advertisement. The ban on hard liquor advertising had been in effect since 1936 for radio and 1948 for television
Assuming that advertising is a prisoner's dilemma, and that if one company advertises, its competitors will also choose to spend money to advertise, did the lifting of this ban likely increase or decrease the profits of hard liquor companies? Briefly explain. What will be an ideal response?