The foundational principle that makes insurance companies work is called:
A. risk pooling.
B. risk assignment.
C. catastrophic causation.
D. risk analysis.
A. risk pooling.
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Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is
A. 3%. B. 7%. C. 53%. D. 6%.
The labor force participation rate is the fraction of the population over 16 years of age that is looking for work
Indicate whether the statement is true or false
We have read in this chapter that people with insurance may be more likely to engage in risky behavior because they are insured. Does it make sense then that there should be an "insurance tax" on people that engage in these types of activities?
What will be an ideal response?
Assume the analysis of Friedman and Phelps is correct, so that the following equation is valid: Unemployment rate = Natural rate of unemployment - a × (?ctual inflation - x). In this equation,
a. a is a parameter that measures how much actual inflation responds to expected inflation. b. a = 0 at the point of intersection of the short-run and long-run Phillips curves. c. x is the expected rate of inflation. d. All of the above are correct.