"People buy insurance do protect themselves from moral hazard." True or false? Explain
What will be an ideal response?
The statement is false. In fact, insurance creates a moral hazard problem because a person with insurance coverage for a loss has less incentive than an uninsured person to avoid such a loss. For example, a person with fire insurance for his house has less incentive to take precautions against fire than a person with no fire insurance does.
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Suppose that the U.S. population is 275 million. Also assume that the labor force is 135 million and that 130 million people are employed. Calculate the unemployment rate
What will be an ideal response?
The act of buying a product at a low price in one market and reselling the product at a higher price in another market is called arbitrage
Indicate whether the statement is true or false
Monetary policy can
A) shift the short-run trade-off between inflation and unemployment if it affects expected inflation. B) shift the long-run trade-off between inflation and unemployment through changes in cyclical unemployment. C) shift both the short-run and long-run trade-offs between inflation and unemployment if changes in policy are credible. D) shift neither the short-run nor long-run Phillips curve trade-offs between inflation and unemployment.
Which of the following is NOT a reason for average costs to fall according to the learning curve?
A) Workers accomplish tasks more quickly after doing the task a few times. B) Managers schedule more efficiently over time. C) Engineers determine more accurately what tolerances can be used. D) Suppliers may become better able to produce the exact inputs the firm needs. E) Competing firms leave the industry as the learning firm becomes more efficient.