What is moral hazard?
What will be an ideal response?
Moral hazard is a tendency for people to act in risky and reckless ways if they know that others will bear the burden of most or all of any bad consequences.
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Suppose that nominal GDP in year 1 is 200 and nominal GDP in year 2 is 242. Assume that inflation is ten percent per year. How fast did the economy grow between these two years?
A. 10 percent B. 12 percent C. 21 percent D. 42 percent
Refer to the data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the marginal propensity to consume is:
Answer the question on the basis of the following before-tax consumption schedule for a closed economy:
A. .8 before taxes and .6 after taxes.
B. .8 both before and after taxes.
C. .6 before taxes and .8 after taxes.
D. .8 before taxes and .4 after taxes.
Net capital inflows equal:
A. domestic production. B. capital outflows minus capital inflows. C. international production. D. capital inflows minus capital outflows.
The BRIC nations have one quarter of the world's GDP and more than 40 percent of its population
Indicate whether the statement is true or false