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.
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
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