Insurance companies provide higher insurance premiums to plans with lower deductibles as a way of:
A. screening between types of drivers.
B. avoiding moral hazard.
C. reducing the lemons problem.
D. optimizing information acquisition.
A. screening between types of drivers.
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Refer to Figure 2-9. What is the opportunity cost of producing 1 popsicle in Iceland?
A) 1 1/2 snow cones B) 3/4 of a snow cone C) 2/3 of a snow cone D) 270 snow cones
If the relative price of S in terms of T is 2 and S has a nominal price of $1, then the relative price of T is
A) $2. B) 50 cents. C) 1/2 S. D) Need more information to answer.
The reserve ratio is 20 percent. If the Fed buys $1 million of U.S. government securities from a bond dealer by transmitting the funds to the dealer?s deposit account at Bank ABC, then
A) Bank ABC can make no additional loans. B) Bank ABC can make additional loans up to $800,000. C) Bank ABC can make additional loans up to $1 million. D) Bank ABC cannot make any additional loans, but the system as a whole can make additional loans up to $1 million.
Which of the following propositions would a proponent of supply-side economics be most likely to stress?
a. Because they expand government revenues, higher marginal tax rates will lead to a reduction in the budget deficit and to lower interest rates. b. Because they encourage investors to undertake low-productivity projects with substantial tax-avoidance benefits, higher marginal tax rates promote economic inefficiency. c. Because they do not consume resources directly, income redistribution payments will exert little impact on real aggregate supply. d. The primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus.