Refer to Figure 16-3. What prices are charged in the two markets?

Which of the following is not an advantage of risk pooling?

A) By insuring large groups as opposed to individuals, health insurance providers reduce adverse selection. B) It gives very sick people in the group the same access to health care and to pay the same premiums as healthy individuals. C) It is easier for an insurance company to estimate the average number of claims likely to be filed under a group policy than it is to predict the number of claims likely to be filed under an individual policy. D) Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services.

Answer the following questions true (T) or false (F)

1. An appropriate fiscal policy response when aggregate demand is growing at a faster rate than aggregate supply is to decrease the money supply. 2. To complement actions by the Fed to reduce inflation, Congress and the President can cut spending and/or raise taxes. 3. The multiplier effect following an increase in expenditure is generated by induced increases in consumption expenditure as income rises.