The cost disease of personal services causes
a. the cost of health care to rise faster than the economy's rate of inflation.
b. legislators to blame declining standards of quality at public hospitals on greedy doctors or administrators.
c. legislators to propose price controls on insurance.
d. All of the above are correct.
d
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The value of a virtual chat room to an individual user increased as more people started using it. This is an example of a(n) ________
A) moral hazard B) adverse selection C) network externality D) negative externality
How does the principal-agent problem increase the possibility of moral hazard?
What will be an ideal response?
Gross domestic product (measured in real dollars) is an important social tool because it provides
a. observers with a reasonably good index of social progress. b. policy makers with a measure of the nation's total wealth. c. policy makers with information about the economy's current rate of output and the direction of recent changes. d. economists with a reasonably good measure of income inequality.
The marginal propensity to save is:
A. Equal to (1 + MPC). B. The fraction of each additional dollar of saving that goes to the stock market. C. The fraction of each additional dollar of disposable income that goes to saving. D. (Total savings) รท (total disposable income).