In a television advertisement for AFLAC supplemental health insurance, an ice skater says to his skating partner, "Do you want to try a triple jump?" She responds, "Why not, I have AFLAC." This response illustrates the:
A. principal-agent problem.
B. adverse selection problem.
C. moral hazard problem.
D. free-rider problem.
Answer: C
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The Ricardian equivalence theorem suggests that an increase in the government budget deficit created by a tax cut will
A) decrease real Gross Domestic Product (GDP) in the short run, but increase it in the long run. B) decrease real Gross Domestic Product (GDP) in both the short and long run. C) increase real Gross Domestic Product (GDP) in both the short and long run. D) have no effect on aggregate demand.
Refer to Figure 13-6. Suppose Dell finds the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced is as shown by Figure 13-2
Dell will maximize profits if it produces ________ notebook computers per month. A) 100,000 B) 200,000 C) 300,000 D) Not enough information is given to determine the profit-maximizing quantity.
The purchase of VCU2 by Tomas Tiergarten, a private resident, causes the nation's:
a. Monetary base to fall. b. M2 money supply to fall. c. M2 money multiplier to remain the same. d. M2 money supply to rise.
recessions
What will be an ideal response?