One reason why adverse selection problems arise in health insurance markets is that
A) sick people are more likely to want health insurance than healthy people.
B) because of advances in medical technology, people are living longer. These medical advances are costly and drive up the price of insurance for everyone.
C) the average age of citizens of the United States has increased in recent years, and will continue to increase over the next 20 to 30 years. As older citizens retire, more and more of their medical bills will have to be paid by younger workers.
D) fewer men and women are choosing medical careers because of the increase in the cost of malpractice insurance.
Answer: A
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Some Internet companies like Amazon reduce the transaction costs of many purchases by
A) providing misleading information about the quality of products. B) providing information about products and firms that supply those products. C) advertising sales at local discount stores. D) paying its employees low wages.
Inflation costs are minimized under which inflation rate?
a. -20 percent b. 5 percent c. 15 percent d. 575 percent
When critics of U.S. farm policy say that it treats symptoms rather than causes, they mean that the:
A. policy attempts to bolster low farm income, while the real problem is an overallocation of resources to agriculture. B. policy deals with the overallocation of resources to agriculture, while the basic farm problem is low incomes. C. policy attempts to bolster low farm incomes, while the real problem is an underallocation of resources to agriculture. D. restriction of output in the short run may reduce productive capacity in agriculture in the long run.
If both the real interest rate and the nominal interest rate are 3 percent, then the:
A. inflation premium is zero. B. real GDP must exceed the nominal GDP. C. nominal GDP must exceed the real GDP. D. inflation premium also is 3 percent.