Insurance works best in situations where there is
a. a high probability of a small loss.
b. a low probability of a small loss.
c. a high probability of a large loss.
d. a low probability of a large loss.
e. the level of probability and the size of the loss are irrelevant.
D
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
General equilibrium analysis is the study of
A) how an equilibrium is determined in all markets simultaneously. B) how an equilibrium is determined in all closely related markets. C) the effects of a change in a market, and all spillover effects in all related markets. D) Any of the above.
The price elasticity of supply is __________ elastic over time because ___________.
A. less; producers get accustomed to the price changes B. less; the ideal number of firms have time to move into or out of the industry C. more; producers have a longer time to adjust their production decisions D. more; producers get accustomed to the price changes
In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70 . Using this information compute the change in disposable income from Year 1 to Year 2
a. Disposable income increased by $2,800 million in Year 2. b. Disposable income decreased by $2,000 million in Year 2. c. Disposable income increased by $2,000 million in Year 2. d. Disposable income increased by $4,500 million in Year 2. e. Disposable income decreased by $2,600 million in Year 2.