When people purchase health insurance and then change their behavior after the purchase because the insurance protects them from loss, the health insurance market is said to face the problem of
A) asymmetric information.
B) moral hazard.
C) adverse selection.
D) the rationality paradox.
B
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The basic Keynesian argument for discretionary monetary policy is that
A) monetary policy is the principal cause of business cycles. B) monetary policy is much more effective than fiscal policy. C) aggregate demand is unstable and monetary policy can help to stabilize it. D) reducing unemployment is much more important than reducing inflation.
Clifford lives by the motto "Eat, drink, and be merry today, for tomorrow doesn't matter"
If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function? A) U = x - y B) U = x/y C) U = x D) U = y
Assuming the Fed is following the Taylor Rule, if inflation is 3 percent, target inflation is 2 percent, and output is 1 percent above potential, what would you predict would be the Fed funds rate target?
A. 5 percent B. 5.5 percent C. 4 percent D. 6 percent
An advantage of the household survey over the establishment survey of the labor market is that the household survey
A) is based on actual payrolls, rather than on unverified answers. B) includes the number of self-employed persons. C) includes the number of discouraged workers. D) omits persons employed at newly opened firms.