If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce
A) the problem of adverse selection.
B) the moral hazard problem.
C) sunk costs.
D) asymmetric information.
Answer: B
Economics
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Suppose Okun's law holds and a one percentage point increase in the unemployment rate reduces real output by 2% of full-employment output
The expectations-augmented Phillips curve is given by ? = ?e - 2.5 (u - 0.04). Suppose ? = 0.08 and ?e = 0.03. (a) What is the natural rate of unemployment? (b) What is the actual rate of unemployment? (c) How much is actual GDP compared with full-employment GDP?
Economics
The demand curve a monopoly faces is
A. horizontal. B. upward sloping. C. vertical. D. downward sloping.
Economics