Suppose that Harold buys collision insurance for his car and then drives it recklessly. This is an example of:
A. a positive spillover.
B. moral hazard.
C. adverse selection.
D. irrational behavior.
Answer: B
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During early 2001, the Fed unexpectedly increased the money supply. The effect of this policy was a
A) downward shift of the short-run Phillips curve. B) rightward shift of the long-run Phillips curve. C) upward shift of the short-run Phillips curve. D) movement upward along the short-run Phillips curve. E) movement downward along the short-run Phillips curve.
Who among the following is the most likely to invest in human capital?
A) A person with a low rate of time preference B) A person with a high rate of time preference C) A person with no time preference D) None of the above.
If nominal GDP is $8 trillion, and the money supply is $2 trillion, velocity is
A) 0.25. B) 4. C) 8. D) 16.
The division of labor facilitates productivity increases for all of the following reasons, except one. Which is the exception?
a. It allows people to do those tasks for which they have the greatest natural ability. b. Workers get better at tasks, the more they repeat them. c. The more experience workers gain by specializing in a task, the more likely they will enjoy that task. d. More sophisticated production techniques are introduced. e. The division of labor often permits the introduction of labor-saving machinery.