Suppose Country A is labor-abundant and capital-scarce, and Country B is labor-scarce and capital-abundant. Good X is produced using a labor-intensive technology and Good Y is produced using a capital-intensive technology. Which of the following can most reasonably be inferred from the given information?

Consumers usually pay less than the total cost of medical treatment because

A) a third party, usually an employer, often pays most of the bill. B) competition forces doctors and hospitals to charge prices that do not cover their costs. C) the federal government pays for most medical procedures. D) a third party, usually an insurance company, often pays most of the bill.

One reason for the controversy surrounding the decision by the European Central Bank to buy Greek bonds was that:

A) it may increase moral hazard by encouraging other European governments to issue more debt than private investors were willing to buy B) it may increase adverse selection by encouraging other European governments to issue more debt than private investors were willing to buy C) it may result in higher risk premiums as private investors anticipate a default by Greece D) it may worsen the Greek recession by increasing Greek interest rates