Capital gains tax cuts inevitably benefit
a. low-income workers.
b. retired persons.
c. workers in large cities.
d. high-income stock owners.
d
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What factors generate economic growth?
What will be an ideal response?
Suppose a large firm allows its employees to choose whether to participate in its health insurance plan. The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible, and Plan II has a high monthly premium but a
low deductible. Under which plan is adverse selection likely to be a bigger problem? A) Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles. B) Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect.
If a firm can adjust its employment of all inputs, then it is
a. experiencing economies of scale. b. in the long run. c. off its expansion path. d. limited only by the capacity of its fixed capital.
Systemically important financial institutions are:
A) banks that are owned and run by the government. B) large banks that have become a large market power. C) all banks whose value of liabilities exceeds its value of assets. D) all banks whose value of assets exceeds its value of liabilities.