An insurance company requires homeowners it insures to have smoke detectors in their homes. The insurance company is trying to combat the
A. adverse selection problem.
B. the free-rider effect.
C. moral hazard problem.
D. "lemons" problem.
E. none of the above
Answer: C
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Continuous increase in investment in which of the following is most likely to cause sustained growth?
A) Capital B) Technology C) Land D) Labor
In Figure 3-4 above, the marginal propensity to consume is
A) 500. B) 2.5. C) 0.6. D) 0.4. E) 1.5.
Which of the following is most likely to increase U.S. exports?
a. The government gives subsidies to U.S. firms that export goods or services. b. The government reduces the size of the budget surplus. c. The United States unilaterally reduces its restrictions on foreign imports. d. Taxes on domestic saving rise.