If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce
A) the problem of adverse selection.
B) the moral hazard problem.
C) sunk costs.
D) asymmetric information.
Answer: B
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The total government expenditure multiplier is less than one because
A) government expenses affect labor demand. B) labor supply reacts to interest rate changes and consumption demand is affected by taxes. C) investment demand falls dramatically when the government goes into debt. D) the marginal propensity to consume is less than one.
You should use the QLR test for breaks in the regression coefficients, when
A) the Chow F-test has a p value of between 0.05 and 0.10. B) the suspected break data is not known. C) there are breaks in only some, but not all, of the regression coefficients. D) the suspected break data is known.
From the mid-1980s until late 2007, many world economies became less volatile because of:
a. sound macroeconomic policies b. several structural change that made the economies more flexible c. good luck d. All of the above. e. a through c only
One of the most important forms of capital income is
A. interest. B. investments. C. dividends. D. rents.