Moral hazard is:
A. when buyers and sellers with the same information about the quality of a good or the riskiness of a situation agree to a somewhat shady deal.
B. the tendency for people to behave in a riskier way or provide less effort when they do not face the full consequences of their actions.
C. when people engage in behavior that is considered highly desirable by the person who bears the cost of the behavior.
D. when buyers and sellers have different information about the quality of a good or the riskiness of a situation.
Answer: B
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Refer to the following figure. When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?
A. -1/3 B. -3 C. -5 D. -2/3 E. -1
We see a backward-bending labor supply curve whenever
A. the income effect dominates the substitution effect over some range of wage rates. B. the substitution effect dominates the income effect over some range of wage rates. C. minimum wages are set too low. D. minimum wages are set too high.
Which of the following statements apply to international banking facilities (IBFs)?
a. IBFs are subject to U.S. interest rate regulations. b. IBFs are located all over the world. c. IBFs do not require FDIC deposit insurance premiums. d. IBFs offer a higher interest rate spread than normal U.S. banks. e. IBFs allow European residents to participate in the American stock exchanges.
Explain how tax cuts can impact both aggregate demand and aggregate supply. Give an example of each