In terms of insurance, which of the following statements is explained by adverse selection?
A. A person with riskier characteristics tends to be more likely to buy insurance.
B. A person who is more risk-averse tends to be more likely to buy insurance.
C. Insurance companies charge risk-averse customers a higher premium, since they need more peace of mind.
D. None of these statements is true.
A. A person with riskier characteristics tends to be more likely to buy insurance.
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The magnitude of the slope of the budget line is determined by
A) the marginal rate of substitution. B) the level of income. C) the consumer's preferences for the goods. D) relative prices.
From an initial IS-LM equilibrium with normally-sloped IS and LM curves, the money supply falls. At the new IS-LM equilibrium we have some combination of a ________ income and a ________ interest rate
A) higher, higher B) higher, lower C) lower, higher D) lower, lower
In open market operations, when the Fed __________ securities, bank reserves __________
A) buys; contract B) buys; expand C) sells; expand D) None of the above.
Which of the following best explains the difference between commodity money and fiat money?
A. Fiat money has no value except as money, whereas commodity money has value independent of its use as money B. all money is commodity money, as it has to be exchanged for gold by the central bank C. commodity money has no value except as money, where as fiat money has value independent of its use as money