If someone had money in a bank, but did not care if their bank invested in risky assets, this would be considered an example of:
a. public good
b. externality
c. irreversible decision
d. moral hazard
e. rent seeking
Answer: d. moral hazard
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If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion
A) it has a $1 billion surplus in its balance of payments. B) it has a $1 billion deficit in its current account. C) it has a $1 billion surplus in its current account. D) its capital and financial account shows a surplus.
In April 1977 the price of a pound of coffee was $3.00. Between 1977 and 2017 the Consumer Price Index (CPI) rose from 60.6 to 245.1. In April 2017 the price of a pound of coffee was $1.20. What is the price of a pound of coffee in April 1977 adjusted for inflation in 2017?
a. $0.74 b. $4.85 c. $7.28 d. $12.13
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.
The Social Security tax is regressive because:
A. The Social Security tax rate applied does not rise with the salary level B. No Social Security tax is collected for incomes in excess of a "cap" income level C. Each individual must pay a set percentage of his or her income in Social Security taxes D. As income increases, the Social Security tax rate increases at a decreasing rate