Differentiate between taste-based discrimination and statistical discrimination
What will be an ideal response?
Taste-based discrimination occurs when people's preferences cause them to discriminate against a certain grou
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The assumption that people act in their best self-interest means people
a. do what gives them the greatest benefits at the lowest costs. b. are selfish. c. do what gives them the smallest benefits at the greatest costs. d. are irrational.
Among the answers given below, which one does not explain why an economy grows?
a. growth of population and the labor force b. capital accumulation and capital deepening c. technological change d. high death rates and high birth rates e. increases in skill levels for workers
Crowding out can best be defined as
a. higher interest rates caused by restrictive monetary policy, which reduces investment. b. higher interest rates caused by restrictive monetary policy, which increases saving and reduces consumption spending. c. government budget deficits causing a drop in private borrowing because of higher interest rates. d. government budget deficits causing a drop in interest rates, which reduces private saving.
The state of Massachusetts requires all citizens to purchase medical insurance or face a monetary penalty when filing their taxes. The penalty is significantly less than the average annual insurance premium. Moreover, the state requires insurance companies to issue policies to anyone who applies, regardless of their health at the time of application. Which of the following examples describes the
inherent adverse selection problem? a. Tricia purchases an insurance policy through her employer and visits her doctor for annual check-ups. b. Sue purchases insurance only after learning that she has cancer. c. Mike pays the penalty rather than purchasing insurance because it is cheaper for him than paying insurance premiums and he is generally in good health. d. Both b and c are correct.