When people by insurance they often adopt risky behavior. This is an example of
A) adverse selection.
B) moral hazard.
C) a negative externality.
D) moral hazard and a negative externality.
B
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Average total cost is ______.
a. how much it costs to produce one unit of output b. the mean sum needed to buy one unit of output c. the variable input costs that change with output d. the cost changes resulting from a change in output
If banks face a reserve requirement of 10%, then when the Fed increases bank reserves by $20 million, the money supply can be estimated to increase by about
A. $2 million. B. $20 million. C. $200 million. D. None of the choices are correct.
Suppose a person can play the lottery for $1.00. His chance of winning $25 million is 1 in 50 million. If there are no other costs or benefits involved, the logic of cost/benefit analysis says:
A. he should not play the lottery. B. he should play only if he does not have a self-control problem with gambling. C. he should play the lottery. D. there is not enough information to decide whether he should play.
Currency and checkable deposits are
A. the major components of money supply M1. B. assets of the Federal Reserve Banks or of financial institutions. C. of intrinsic value that determines the relative worth of money. D. redeemable for gold and silver from the Federal Reserve System.