Answer the following questions true (T) or false (F)
1. Moral hazard refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.
2. Vaccinations tend to result in a positive externality.
3. College education tends to result in a negative externality because the recipient does not receive the full benefit of the education.
1. TRUE
2. TRUE
3. FALSE
You might also like to view...
Off-balance sheet activities involving guarantees of securities and back-up credit lines
A) have no impact on the risk a bank faces. B) greatly reduce the risk a bank faces. C) increase the risk a bank faces. D) slightly reduce the risk a bank faces.
Ceteris paribus means:
A.) Leave the market alone. B.) Noninterference by the government. C.) Other things remaining equal. D.) Things are always changing.
Exogenous changes in spending refer to changes in planned spending:
A. caused by changes in output. B. caused by changes in the real interest rate. C. not caused by changes in output or changes in the inflation rate. D. caused by changes in the inflation rate.
If gas prices today were $2.00 per gallon, in terms of history, this would be
A. not an all-time high but rather high in inflation-adjusted terms. B. an all-time high in nominal terms. C. about the long-inflation-adjusted term historical average in inflation-adjusted terms. D. an all-time high in inflation-adjusted terms.