With respect to the insurance market, what is adverse selection?
A) Adverse selection refers to the actions people take before they purchase an insurance policy.
B) Adverse selection refers to the actions people take, after they purchase an insurance policy, that make the insurance company worse off.
C) Adverse selection refers to people who purchase one type of insurance policy when they would have been better off purchasing a different policy.
D) Adverse selection refers to the situation in which a person purchasing an insurance policy takes advantage of knowing more about his health than the insurance company knows.
D
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Increasing the growth rate of GDP per capita and sustaining this growth rate in an economy can
A) increase the level of poverty. B) lower life expectancy. C) increase infant mortality. D) increase standards of living.
Suppose Chip's Chips produces bags of potato chips. An example of a fixed cost for this company would be:
A. a potato peeling machine. B. the factory building. C. the deep fryer. D. All of these are examples of fixed costs.
Which of the following is true?
a. Inflation and unemployment rates can both increase in the short run in response to positive supply shocks. b. Inflation and unemployment rates can both decrease in the short run in response to reduced aggregate demand. c. Inflation and unemployment rates can both decrease in the short run in response to positive supply shocks. d. The short-run Phillips curve relationship appears to be relatively stable over time.
Keynesians would recommend
A. Lower government expenditures when there is a shortfall in aggregate demand. B. Lower taxes when there is excess aggregate demand. C. Higher taxes when there is excess aggregate demand. D. Reliance on the market rather than the government for adjustment when an undesirable level of aggregate demand occurs.