When economists use market values to aggregate output, they sum the:
A. number of items produced.
B. quantity of items produced.
C. inputs of each item produced.
D. price times the quantity of each item produced.
Answer: D
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In insurance markets, moral hazard creates economic inefficiency because:
A) insurance companies are price setters rather than price takers. B) insurance products are not homogenous goods. C) there are many buyers but only a few sellers. D) insured individuals do not correctly perceive the costs or benefits of their actions.
Which of the following would mostly likely shift the production possibilities curve in an outward direction?
a. a decrease in the current rate of unemployment b. a movement along the curve sacrificing capital goods for consumption goods c. an increase in the price of goods and services d. advances in medicine that reduce the incidence of disease and lengthen productive life spans
Taxes are either
a. regressive, proportional, or degressive. b. regressive, proportional, or progressive. c. degressive, proportional, or progressive. d. regressive, progressive, or degressive.
A policymaker in favor of stabilizing the economy would be likely to believe
a. recessions are a waste of resources.
b. economies must suffer through the booms and busts of the business cycle.
c. the long policy lags make implementing policy changes in response to recession too risky.
d. policy increases the magnitude of economic fluctuations.