When you rent a car, you might treat it with less care than you would if it were your own. This is an example of
a. market risk.
b. moral hazard.
c. adverse selection.
d. risk aversion.
b
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If a currency rapidly depreciates, what are the possible negative results to the economy of using contractionary monetary policy to address the depreciation?
What will be an ideal response?
The gasoline tax
a. is similar to most other taxes in that it causes deadweight losses. b. produces the unfortunate side-effect of making the roads more dangerous. c. can be viewed as a corrective tax aimed at multiple negative externalities associated with driving. d. can be viewed as a command-and-control policy aimed at discouraging people from driving.
Discretionary fiscal policy refers to:
A. any change in government spending or taxes that destabilizes the economy. B. the authority that the president has to change personal income tax rates. C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. D. the changes in taxes and transfers that occur as GDP changes.
A market incentive plan:
A. makes the price of a resource reflect not only the marginal private costs but also the marginal social costs of consuming that resource. B. makes the price of a resource reflect the marginal private costs of consuming that resource. C. regulates the amount of a resource a person can consume through direct limits. D. requires that people choose to consume until the marginal costs exceed the marginal benefits.