When net exports equal zero, the economy is in macroeconomic equilibrium

In Eugene, Oregon, next year there is a 2% chance of an earthquake severe enough to destroy all buildings and personal property

Quincy, who has $3,000,000 in buildings and personal property, has the opportunity to purchase complete earthquake insurance. Which is true? A) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's all he could possibly lose in an earthquake. B) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's his expected loss in an earthquake. C) If Quincy buys earthquake insurance, and an earthquake does not occur, he will have received no utility from the transaction. D) What Quincy is willing to pay for the earthquake insurance depends upon his degree of risk aversion. E) Quincy should be willing and able to pay up to $3,000,000 for earthquake insurance.

Assume that constant returns to scale exists and that N and K both decrease by 3%. Given this information, we know that

A) output (Y) will decrease 6%. B) Y will decrease by 3%. C) Y will decrease by less than 3%. D) the capital-labor ratio (K/N) will decrease.