The International Maritime Bureau said the waters off Somalia are the world's most dangerous, accounting for nearly a third reported pirate attacks worldwide. Suppose all boats are insured to $100,000 and pay a premium of $10,000 each
Suppose 10 out of 100 boats are attacked by pirates and these 10 file claims with their insurance. If the insurance company's only costs are the claims it must pay, has the insurance company earned an economic profit? A) Yes, they earned an economic profit of $90,000.
B) No, they broke even.
C) No, they sustained an economic loss of $90,000.
D) Yes, they earned an economic profit of $1,000,000.
B
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Illegal activities in an economy are not included when calculating an economy's GDP
a. True b. False Indicate whether the statement is true or false
?For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of adverse selection?
a. After the loan has been made, individuals become careless with their finances
b. Individuals most likely to default are the ones most likely to apply for the loan
c. Borrowers investing their loan proceeds differently than the bank requires
d. None of the above
The example of an inflationary gap in 2006–2007 suggested that the economy adjusts
A. rapidly to inflationary gaps by lowering prices. B. rapidly to inflationary gaps by raising prices. C. slowly to inflationary gaps by lowering prices. D. slowly to inflationary gaps by increasing inflation.
Tom buys a futures contract for U.S. Treasury bonds and on the settlement date the interest rate on U.S. Treasury bonds is lower than Tom expected. Tom will have:
A. lost money on his long position. B. gained money on his long position. C. gained money on his short position. D. lost money on his short position.