Which of the following actions best illustrates adverse selection?
a. A person adds risky stock to his portfolio.
b. A person who has narrowly avoided many accidents applies for automobile insurance.
c. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
d. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
b
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According to the text, which of the following statements BEST describes U.S. factor abundance in 1947?
a. Taking into account different labor productivities, the U.S. "effective" labor force was much larger than the "effective" labor force in the rest of the world. b. Taking into account different labor productivities, the U.S. '"effective" labor force was much smaller than the "effective" labor force in the rest of the world. c. Taking into account productivities of capital in different industries, the U.S. "effective" capital stock was much smaller than the '"effective" capital stock force in the rest of the world. d. Corrected data indicate that the United States was actually was a laborabundant and capitalpoor country in 1947.
The fractional banking system _____.
(A) Prevents excessive defaults. (B) Makes banking more secure. (C) Only works if there are a limited number of banks. (D) Ensures growth in the economy.