Moral hazard occurs because people act

A) in the interest of others at all time.
B) in the best interest of society.
C) in their own self-interest.
D) like anarchists.


C

Economics

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The change in national income that is generated by a change in aggregate expenditure is called

a. autonomous consumption b. marginal propensity to consume c. equilibrium multiplier d. aggregate expenditure multiplier e. income multiplier

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Unemployment compensation payments:

A. rise during a recession and thus reduce the severity of the recession. B. rise during a recession and thus increase the severity of the recession. C. rise during inflationary episodes and thus reduce the severity of the inflation. D. fall during a recession and thus increase the severity of the recession.

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If the marginal benefit from water pollution abatement increases, then it is efficient to:

A. reduce water pollution to zero. B. allow more water pollution. C. let the market determine water pollution D. reduce water pollution further, but maybe not to zero.

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