The two big problems facing insurance companies in trying to manage risk are:
A. adverse selection and moral hazard.
B. moral hazard and diversification.
C. risk pooling and diversification.
D. risk pooling and adverse selection.
Answer: A
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Refer to the table above. The capital and financial account balance is
A) $190 billion. B) $200 billion. C) -$190 billion. D) -$200 billion. E) $1,900 billion.
A government-imposed restriction on the quantity of a specific good that another country is allowed to sell in the U.S. is
A) a regional trade bloc. B) an import quota. C) a voluntary import expansion. D) a voluntary restraint agreement.
Which of the following is NOT a characteristic of a laissez-faire system?
A. Enforcement of contracts B. Protecting private property rights C. Minimal government intervention D. Public ownership of all capital
Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The "optimal" amount of environmental damage would be
a. $0 b. $40 c. $450 d. $500