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 $15,000 each
Suppose 10 out of 100 boats are attacked by pirates and these 10 file claims with their insurance. Has the insurance company earned an economic profit? A) Yes, they earned an economic profit of $500,000.
B) Yes, they earned an economic profit of $50,000.
C) No, they sustained an economic loss of $85,000.
D) No, they broke even.
A
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One way to sidestep the debate over whether the government should increase spending during economic downturns is to:
A. cut government spending so the government has no ability to spend money. B. return to the gold standard so that the value of the U.S. dollar remains strong. C. identify projects that nearly everyone can agree the government should fund. D. raise taxes so that the government has the money it needs for additional spending.
Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. A bundle of goods that Country B could not make would be:
A. (300 iPods, 500 tablets). B. (400 iPods, 250 tablets). C. (200 iPods, 750 tablets). D. (100 iPods, 1,000 tablets).
People hold money primarily because it
a. increases in value when there is inflation. b. serves as a store of value. c. serves as a medium of exchange. d. functions as a unit of account.
Restrictions on imports
A. protect United States jobs. B. usually have no permanent effects on an economy. C. is the best way to increase exports. D. eventually reduce exports.