Moral hazard is more likely to arise when:
A. one side of an economic relationship cannot observe the behavior of those on the other side.
B. adverse selection is present.
C. insurance policies have high deductibles.
D. people are uninsured.
Answer: A
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Answer the following statement(s) true (T) or false (F)
1. A negligence standard, with the allowance of contributory negligence, always leads to a socially optimal outcome. 2. Strict liability is the liability that exists when it can be proven beyond a reasonable doubt that the defendant was negligent. 3. Negligence is irrelevant when a strict liability standard is applied. 4. The principle of general average gives a ship's captain an incentive to consider the value of cargo when jettisoning it to prevent a disaster. 5. The doctrine of Respondent Superior contends that an employer is sheltered from torts committed against his employees.
Open market sale of government securities by the Fed decreases the federal funds rate
Indicate whether the statement is true or false
Devastating damage resulting from a major earthquake and tsunami will most likely
A) initially move a country to a time path beneath its balanced growth path. B) move a country to a lower point on its balanced growth path. C) shift the balanced growth path for a country to a new, lower level. D) have little to no impact on the short-term growth rate in a country.
In recent years, people have benefited from greater amounts of leisure time. This trend:
a. has caused GDP to rise. b. has caused GDP to fall. c. made GDP fluctuate randomly. d. is not accounted for in GDP.