The government sector balance is equal to ________
A) net taxes minus government purchases of goods and services
B) tariffs minus imports
C) saving minus investment
D) exports minus imports
A
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In the wake of worsening relations with China, some Americans called for an increase in tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing produced in China, the price of clothing in America would
A) decrease. B) increase. C) not change. D) first increase then decrease. E) first decrease then increase.
Johnny owns a house that would cost $100,000 to replace should it ever be destroyed by fire. There is a 0.1% chance that the house could be destroyed during the course of a year. Johnny's utility function is U = W0.5
How much would fair insurance cost that completely replaces the house if destroyed by fire? Assuming that Johnny has no other wealth, how much would Johnny be willing to pay for such an insurance policy? Why the difference?