An individual will never buy complete insurance if:
a. he or she is risk averse.
b. insurance premiums are unfair.
c. he or she is a risk taker.
d. insurance premiums are fair.
c
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Without warranties, used car buyers can assume that all used cars are "lemons" because of
A) moral hazard. B) moral dilemma. C) adverse selection. D) adverse reaction.
iPods are less expensive in Canada than the United States, once the exchange rate is taken into account. This is an indication that
A) the nominal exchange rate is equal to one. B) purchasing power parity does not hold. C) the law of one price holds. D) the exchange rate is fixed.
How will the new federal government's new national health care program be funded?
A) The federal government will charge all participants of health insurance exchanges 3.8%. B) Firms with at least 50 employees must pay an annual fine of up to $750 per employee regardless of coverage. C) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for individuals and above $250,000 per year for married couples. D) Nearly all U.S. residents will pay a fine of up to $750 per year for an individual (up to $2,250 per year for a family) regardless of coverage.
Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is credible, then
A) the public's expected inflation will remain unchanged. B) the short-run aggregate supply curve will rise. C) over time inflation will fall. D) all of the above. E) both A and C.