Which of the following is an application of the moral-hazard problem?
a. a person buying insurance after a cancer diagnosis.
b. an salesperson who is not paid on commission being rude to customers.
c. coffee hounds buying the menu item meant for lower-demand consumers.
d. only inexperienced workers applying for a managerial job advertised with a relatively low salary.
b
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Since the mid-1980s tariff rates in most nations have risen
Indicate whether the statement is true or false
Holding other things constant, an increase in the inflation rate in the US compared to China may cause the demand for dollar to _____________ and the supply for dollar to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
Military spending is a good example of an automatic stabilizer
a. True b. False Indicate whether the statement is true or false
The reason that the production possibilities curve is usually a bow-shaped curve instead of a straight line is that
a. it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line b. early economists began drawing them in this way and the convention has continued throughout the years c. output eventually reaches a maximum and then declines d. resources are not perfectly adaptable to the production of all goods