Bob is planning to sell his home. In preparation for the sale, he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem. This is an example of
a. moral hazard.
b. screening.
c. adverse selection.
d. the principal-agent problem.
c
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Suppose the insurance company cannot tell them apart but expects them to be different values and charges them an average premium of $1850 . How much profit would it make?
a. $1850 b. Zero-they would break even c. They would make a loss of $650 d. They would make a loss of $1100
The value of child-rearing and other household production are not included in GDP
a. True b. False Indicate whether the statement is true or false
The demand curve for loanable funds is downward sloping because: a. people save more at higher interest rates
b. more investments are profitable at low interest rates than at high interest rates. c. future income is more valuable now at higher interest rates than at lower interest rates. d. usury laws increase the quantity of funds demanded at low interest rates but do not affect the quantity of funds demanded at high interest rates.
To obtain a discount loan from the Fed, a commercial bank must:
A. provide collateral. B. agree to more frequent examinations. C. prove that the loan will be used to make loans. D. prove that it will fail if it does not obtain the loan.