Assume that a single insurance plan covers 2,000 low-risk people and 1,000 high-risk ones, all of whom pay the same premium, at which the insurer breaks even. If the average claim submitted by low-risk people is $100 while that submitted by high-risk people was $1,000 . what would be the net benefit to a low-risk person from holding a policy?
a. -$300
b. -$250
c. $100
d. $500
A
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A U.S. family flies from Boston to Shanghai on a China Airlines plane. This transaction is
A) considered an export of service in the U.S balance of payment accounts. B) a deficit item in the balance of payment accounts of China. C) Both of the above are correct. D) none of the above.
The expression, "There's no such thing as a free lunch," implies that
A) no one has time for a good lunch anymore. B) opportunity costs are incurred when resources are used to produce goods and services. C) everyone has to pay for his own lunch. D) the person consuming a good must always pay for it.
Economic models
A) make no assumptions in order to remain as accurate as possible. B) are simplified versions of reality. C) can not be used to analyze real-world issues. D) magnify the complexity of economic issues in order to provide useful data.
Most economists believe that fiscal policy is:
A. Better than monetary policy for "fine-tuning" the economy B. Better than monetary policy for month-to-month stabilization C. Not as good as monetary policy for month-to-month stabilization D. Not very good at pushing the economy in a particular direction