When the monopoly insurer cannot observe the care taken by the insured party to avoid an accident, the most profitable contract for it:
a. offers full insurance at a higher price than the full-information policy.
b. offers full insurance at a lower price than the full-information policy.
c. offers partial insurance at a higher price than the full-information policy.
d. offers partial insurance at a lower price than the full-information policy.
d
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If disposable income increases by $5 billion and consumer spending increases by $4 billion, the marginal propensity to consume equals:
A. 20. B. 0.8. C. 9. D. 1.25.
All of the following statements about secondary credit are true EXCEPT
A) they are temporary, short-term loans to satisfy seasonal requirements. B) the secondary credit interest rate is set above the primary credit rate. C) it is intended for banks not eligible for primary credit. D) borrowers of secondary credit are less financially healthy.