People who are the most willing to pay high interest rates for loans may have bad credit ratings. This is an example of:
A. moral hazard.
B. an experience rating.
C. adverse selection.
D. a negative spillover.
Answer: C
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What are the two tools of fiscal policy that governments can use to stabilize an economy?
A) taxation and controlling exports B) government spending and taxation C) government spending and technology improvements D) taxation and controlling imports
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus?
A) $0 B) $40 C) $320 D) $360
Which of the following is true?
a. Human choice is generally not influenced by changes in incentives. b. What is true for the individual must be true for the group as a whole. c. Using scarce resources to meet one need reduces our ability to meet needs in other areas. d. The economic way of thinking stresses that good intentions usually lead to sound economic policy.
According to the representative heuristic, people are more likely to believe that something belongs to a given category if:
A. people believe that they themselves are members of the category. B. it shares characteristics with the stereotypical members of that category. C. people can recall other members of the category. D. it is unlike the stereotypical members of that category.