Without reinsurance, insurance companies would be less likely to insure
A. against home fires.
B. against home burglaries.
C. potential terrorist targets.
D. against auto accidents.
Answer: C
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Imagine you own an ice cream store in New York City. Unpredictable inflation hurts your business because:
If the aggregate price level at time t is denoted by Pt, the inflation rate from time t - 1 to t is defined as
A) ?t = (Pt - Pt - 1)/Pt - 1. B) ?t = (Pt + 1 - Pt - 1)/Pt - 1. C) ?t = (Pt + 1 - Pt )/Pt. D) ?t = (Pt - Pt - 1)/Pt.
"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?
What will be an ideal response?
Negative supply shocks confront the Fed with a dilemma because
a. full employment is no longer possible b. the costs of fulfilling one objective are paid in terms of failure to meet the other c. inflation cannot be prevented considering the reduced supply d. all policy choices are equally undesirable e. such shocks are entirely unpredictable