A person who discovers that he/she has advanced stages of cancer and calls his/her life insurance agent to double his/her insurance policy is an example of:
A. the problem of information symmetry.
B. a moral hazard risk.
C. the risk of adverse selection.
D. risk spreading.
Answer: C
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A critical component of supply-side economics is that
a. there is no wage that is so low that someone will not be willing to work for it. b. as the wage gets higher, workers choose significantly less leisure. c. labor supply is inelastic. d. as the wage gets higher, workers are richer and choose more leisure.
If income tax rates are increased in an attempt to balance the federal budget, we should expect to see
a. an increase in consumption and a decrease in GDP. b. an increase in consumption and an increase in GDP. c. a decrease in consumption and a decrease in GDP. d. a decrease in consumption and an increase in GDP.
The locomotive theory posits that growth in one or more large countries
A. will lead smaller countries to open their economies. B. can put pressure on their domestic import-competing firms. C. will retard the growth of smaller countries dependent on exports. D. can raise growth in other smaller countries that trade with these larger countries.
Initially, the U.S. and the IMF believed that
A) the Debt Crisis would require long-term structural changes. B) Latin American economies did not need assistance. C) capital inflows would be unable to solve the debt problems. D) the Debt Crisis was a temporary liquidity problem.