The idea of risk aversion
A) is at odds with the idea of insurance.
B) help explain the profitability of insurance companies.
C) has nothing to do with insurance companies.
D) help explain the losses suffers by the insurance industry.
E) help explain why insurance companies in the long run are zero profit companies.
B
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________ discourage low-risk individuals from seeking health insurance
A) Low premiums B) High premiums C) High costs of medical treatment D) Low interest rates
Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?
A) a positive change in the technology used to produce motorcycles and decrease in the price of motorcycle insurance, a complement to motorcycles B) an increase in the number of motorcycle producers and an increase in the number of consumers who prefer riding motorcycles C) an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles D) an increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance, a complement to motorcycles
Under purchasing power parity (PPP), if U.S. monetary growth leads to a long run doubling of the U.S. price level, while Germany's price level remains constant, PPP predicts that the
A) long-run DM price of the dollar will be doubled. B) long-run DM price of the dollar will be halved. C) long-run DM price of the dollar will remain the same. D) short-run DM price of the dollar will be halved. E) short-run DM price of the dollar will be doubled.
Suppose the economy is initially experiencing a recessionary gap. A reduction in the size of the budget deficit will cause which of the following in the short run?
A) a reduction in the size of the recessionary gap and increase in real GDP. B) an increase in the size of the recessionary gap and decrease in real GDP. C) an increase in inflation and increase in aggregate supply. D) an inflationary gap.