Which of the following is not related to adverse selection in insurance markets?
a. An insurance company has no way of distinguishing among applicants
b. An insurance company must charge a higher price to applicants who are good health risks
c. The price of insurance is attractive to poor health risks, but not to good ones
d. The insured group becomes less healthy on average
e. Because of the relative unhealthiness of the insured group, rates must rise
B
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Refer to the Article Summary. Implementing a negative interest rate policy, as was advocated by the president of the Federal Reserve Bank of Minneapolis, would be designed to ________ the price level and ________ real GDP
A) increase; decrease B) increase; increase C) decrease; decrease D) decrease; increase
John Smith is a typical citizen. Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate. This view is
a. false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. b. false; Smith will tend to choose more carefully when he makes public choices than when he makes private choices. c. uncertain; it would be true if, and only if, Smith's spending on personal computers exceeds his tax bill. d. true; since Smith can decide what computer to buy, but his individual vote is very unlikely to decide the outcome of a congressional election, he has more incentive to inform himself about the computer than the congressional election.
If the output price of a product rises, the demand for capital will increase, raising the rental price of capital
a. True b. False Indicate whether the statement is true or false
If people expect the dollar to depreciate, then the
A) demand for dollars will decrease, the supply of dollars will increase, and the exchange rate will fall. B) demand for dollars will decrease, the supply of dollars will not change, and the exchange rate will fall. C) supply of dollars will increase, the demand for dollars will not change, and the exchange rate will fall. D) demand for dollars will increase, the supply of dollars will decrease, and the exchange rate will rise.