Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to
A) moral hazard. B) adverse selection.
C) asymmetric information. D) market signaling.
A
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In a closed economy with no government, aggregate expenditure is
A) consumption plus investment. B) saving plus investment. C) consumption plus the MPC. D) MPC + MPS. E) none of the above.
Adverse selection in insurance requires that
a. all people face the same risk b. potential customers facing more risk are more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people
A tax imposed on the sellers of a good will lower the
a. price paid by buyers and lower the equilibrium quantity. b. price paid by buyers and raise the equilibrium quantity. c. effective price received by sellers and lower the equilibrium quantity. d. effective price received by sellers and raise the equilibrium quantity.
If the dollar appreciates while foreign income rises:
A. the U.S. AD curve would likely remain unchanged. B. the U.S. AD curve would likely shift to the left. C. what happens to the U.S. AD curve is unclear. D. the U.S. AD curve would likely shift to the right.