Consider the following two situations. Irene accepts a job where she will be driving in dangerous traffic, so she seeks auto insurance. After Victor buys health insurance, he visits the gym less frequently. Which of these person's actions illustrates moral hazard?
a. both Irene's and Victor's
b. Irene's but not Victor's
c. Victor's but not Irene's
d. neither Victor's nor Irene's
c
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A monopoly is the only seller of a product
A. without a wellminusdefined demand curve. B. with many substitutes. C. with a perfectly inelastic demand. D. without a close substitute.
Assume that there is a 25% reserve requirement and that the Federal Reserve buys $200 million worth of government securities. If the securities are purchased from the public, then this action has the potential to increase bank lending by a maximum of ________.
A. $800 million, and also by $800 million if the securities are purchased directly from commercial banks B. $600 million, and also by $600 million if the securities are purchased directly from commercial banks C. $800 million, but only by $600 million if the securities are purchased directly from commercial banks D. $600 million, but by $800 million if the securities are purchased directly from commercial banks
Social Security tax is deducted from your paycheck. In the figure above this will be shown as
A) taxes flowing from households to governments. B) taxes flowing from firms to governments. C) taxes flowing from households to firms. D) wages flowing from firms to households. E) wages flowing from firms to governments.
When and under what circumstances is intervention in international trade justified on market correction grounds? What preconditions would have to be met from the government side for there to be a reasonable likelihood of success?
What will be an ideal response?