PRINCIPLES OF MACROECONOMICS
2nd Edition
ISBN: 9780357129128
Author: OpenStax
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Textbook Question
thumb_up100%
Chapter 15, Problem 14RQ
In a program of deposit insurance as it is operated in the United States, what is being insured and who pays the insurance premiums?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The table below shows pizza topping preferences for Marcus, Dakota, and Austin, and that each individual has strictly transitive preferences. Suppose that three individuals
make up our "society." In this society, prefer pepperoni to cheese pizza; _prefer cheese to supreme; and prefer supreme to pepperoni. This example illustrates that
_
Person
Marcus
Dakota
Austin
0000
First Preference
Pepperoni
Supreme
Cheese
Second Preference
Cheese
Pepperoni
Supreme
Third Preference
Supreme
Cheese
Pepperoni
two-thirds; two-thirds; two-thirds; even if individuals' preferences might satisfy the transitive property, societal preferences may not.
two-thirds; two-thirds; everyone; if individuals' preferences satisfy the transitive property, societal preferences must also.
two-thirds; two-thirds; everyone; even if individuals' preferences might satisfy the transitive property, societal preferences may not.
two-thirds; two-thirds; two-thirds; if individuals' preferences satisfy the transitive property,…
Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics &
criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health
and criminology professors all have the same level of health.
In 2020, every professor was offered a full insurance contract with no premium. In 2021, HU charged any employee who wanted to keep health insurance the actuarially fair
premium based on 2020 expenditures. This premium would be equal to and, as a result,professors dropped their coverage in 2021.
_
2020
2021
Insured? Avg. Expenditures Insured? Avg. Expenditures
Economics Professors
Criminology Professors Yes
Yes $25,000
$15,000
000000
$15,000; criminology
$25,000; econ
$20,000; econ
$15,000; econ
$20,000; criminology
$25,000; criminology
???
$28,000
???
$10,000
Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics &
criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health
and criminology professors all have the same level of health.
There is evidence of
2021
Insured? Avg. Expenditures Insured? Avg. Expenditures
2020
Economics Professors
Criminology Professors Yes.
Yes
$25,000
$15,000
0000
???
???
$28,000
$10,000
I. moral hazard because in 2021 criminology professors dropped their coverage and health expenditures went down.
II. adverse selection because in response to rising premiums after 2020, the professors with lower health expenditure dropped coverage
Both I and II
neither I nor II
Chapter 15 Solutions
PRINCIPLES OF MACROECONOMICS
Ch. 15 - Why is it important for the members of the Board...Ch. 15 - Given the danger of bank runs, why do banks not...Ch. 15 - Bank runs are often described as self-fulfilling...Ch. 15 - If the central bank sells 500 in bonds to a bank...Ch. 15 - What would be the effect of increasing the banks...Ch. 15 - Why does contractionary monetary policy cause...Ch. 15 - Why does expansionary monetary policy causes...Ch. 15 - Why might banks want to hold excess reserves in...Ch. 15 - Why might the velocity of money change...Ch. 15 - How is a central bank different from a typical...
Ch. 15 - List the three traditional tools that a central...Ch. 15 - How is bank regulation linked to the conduct of...Ch. 15 - What is a bank run?Ch. 15 - In a program of deposit insurance as it is...Ch. 15 - In government programs of bank supervision, what...Ch. 15 - What is the lender of last resort?Ch. 15 - Name and briefly describe the responsibilities of...Ch. 15 - Explain how to use an open market operation to...Ch. 15 - Explain how to use the reserve requirement to...Ch. 15 - Explain how to use the discount rate to expand the...Ch. 15 - How do the expansionary and contractionary...Ch. 15 - How do tight and loose monetary policy affect...Ch. 15 - How do expansionary, tight, contractionary, and...Ch. 15 - Which kind of monetary policy would you expect in...Ch. 15 - Explain how to use quantitative easing to...Ch. 15 - Which kind of monetary policy would you expect in...Ch. 15 - How might each of the following factors complicate...Ch. 15 - Define the velocity of the moneyCh. 15 - What is the basic quantity equation of money?Ch. 15 - How does a monetary policy of inflation target...Ch. 15 - Why do presidents typically reappoint Chairs of...Ch. 15 - In what ways might monetary policy be superior to...Ch. 15 - The term moral hazard describes increases in risky...Ch. 15 - Explain what would happen if banks were notified...Ch. 15 - A well-known economic model called the Phillips...Ch. 15 - How does rule-based monetary policy differ from...Ch. 15 - Is it preferable for central banks to primarily...Ch. 15 - Suppose the Fed conducts an open market purchase...Ch. 15 - Suppose the Fed conducts an open market sale by...Ch. 15 - All other things being equal, by how much will...Ch. 15 - Suppose now that economists expect the velocity of...Ch. 15 - If GDP is 1,500 and the money supply is 400, what...Ch. 15 - If GDP now rises to 1,600, but the money supply...Ch. 15 - If GDP now falls back to 1,500 and the money...
Additional Business Textbook Solutions
Find more solutions based on key concepts
S6-2 Determining inventory costing methods
Ward Hard ware does not expect costs to change dramatically and want...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
11-13. Discuss how your team is going to identify the existing competitors in your chosen market. Based on the ...
Business Essentials (12th Edition) (What's New in Intro to Business)
Determining Acquisition Cost. Tarpley, Inc. acquired land for 400,000. The closing costs amounted to 11,000, an...
Intermediate Accounting (2nd Edition)
Consider the sales data for Computer Success given in Problem 7. Use a 3-month weighted moving average to forec...
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
E6-14 Using accounting vocabulary
Learning Objective 1, 2
Match the accounting terms with the corresponding d...
Horngren's Accounting (12th Edition)
Knowledge Booster
Similar questions
- 0000 Health Suppose that you graph nations' health expenditures against income and see that the US's point lies below others (like in the stylized figure below). From the graph below, it appears that the US is However, this may not be the case if_ Switzerland UK US HPF Health expenditures productively inefficient; The US has a population that prefers spending their resources on health productively efficient; The US has a population that prefers spending their resources on health productively efficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others. productively inefficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others.arrow_forwardPlease match the definition to the term that best fits. This occurs when less-risky people are more likely to enroll in health insurance. How much spent out-of-pocket before insurance kicks-in. When no more units of a good can be produced without decreasing the amount of another good or service The amount that the insurance company pays the customer when an insured event occurs. When an individuals income is state independent Behavior changes that occur before an insured event happens and make that event more likely to occur. The fraction of the medical bill that the consumer is responsible for. The fixed amount that is paid for a service at the time service is rendered. This occurs when marginal benefit of a good to a consumer is equal to marginal cost of production Behavior changes that occur after an insured event happens and make recovering from that event more expensive. Monthly fee to enroll in insurance The oversupply of low-quality goods, products, or contracts that results…arrow_forwardfor the 2nd part the last option got cut off, there is also a none of the above choice tooarrow_forward
- MCB MCA The figure to the right shows the marginal cost of pollution abatement for two firms, A and B. The firms were initially abating 36 units of pollution each. Now they can trade pollution permits at a price of $32. As a result, firm permits and firm B A permits. Both firms are now better off and their total saving will be (Enter your answer rounded to the nearest $ whole number.) Dollars per Unit ($) 44 32 20 The Efficiency of Tradable Pollution Permits 31 36 41 Quantity of Pollution Abatement k -6°C Mostly clear Nextarrow_forwardThe figure to the right shows the marginal costs of abatement for an industry's only two firms, A and B. These firms were initially abating 30 units of pollution (the vertical dashed line). Now they can trade permits. The market price for permits under which an efficient pollution abatement will be achieved is $ rounded to the nearest whole number.) 192 176- 160- (Enter your response 144- 128- 112- 96 80- 64- 48- 32- 16 0 0 MC MCB 10 20 30 40 50 60 70 80 90 100 110 12 Pollution Abatement -6°C Mostly clear Nextarrow_forwardThe figure shows the private and social marginal costs and the marginal benefit of producing paper. The marginal social net benefit derived from the production of paper is OA. maximized at an output level of 35 because that is where MCp equals MB. OB. maximized at an output level of 25 because that is where MCs equal MB. OC. zero at an output level of 25 because that is where MCs equals MB. OD. zero at an output level of 35 because that is where MCp equals MB Dollars per Unit 25 35 Quantity of Paper -6°C Mostly clear D=MB Next MCS MCarrow_forward
- Refer to the given figure. MB and MC represent the social marginal benefit and social marginal cost of pollution abatement. The total net benefit from the optimal level of pollution abatement is $ (Enter your response rounded to the nearest whole number.) D Dollars per Unit 0 MC 18 810 Pollution Abatement -6°C Mostly clear Next MBarrow_forwardSuppose that each firm pollutes 100 units and is given 70 pollution permits (i.e., each firm must reduce pollution by 30 units if they do not trade their permits). If firms are allowed to trade their permits, then the equilibrium price of permits will be and permits. and as a result of being able to trade their OA. $10; firm A buys 20 permits from firm B profits fall by $200 for A and rise by $200 for B OB. $10; firm A buys 20 permits from firm B profits rise by $40 for A and rise by $40 for B OC. $12; firm A sells 10 permits to firm B; profits rise by $40 for A and rise by $40 for B OD. $12, firm A buys 10 permits from firm B profits fall by $120 for A and rise by $120 for B E. None of the above Marginal Abatement Cost ($) 18 16- 4 12- 10- 8- MCA 0 10 20 30 40 50 60 70 80 Pollution Abatement 90 -6°C Mostly clear Next M 40arrow_forwardConsider an economy in which there are two polluters: A and B. The marginal cost of pollution abatement curves are given in the diagram to the right. The total cost of reducing pollution by 60 units if it is done efficiently or $ equals $ if it is done by forcing each firm to reduce pollution by 30 units. OA. 925; 1125 OB. 900; 1100 OC. 850, 1050 OD. 800, 1000 OE. None of the above The efficient levels of pollution reduction can be achieved by using a pollution tax equal to $ unit A. 25 0 per MC 45 40 35 30- 25 20- 15 10- 5- Marginal Abatement Cost ($) 10 20 30 40 50 60 70 80 Pollution Abatement -6°C Mostly clear Next 90arrow_forward
- is initially abating Q units of pollution. Suppose that a system of tradeable pollution permits is introduced into this market and the equilibrium permit price is P* Firm B will sell permits to Firm A because OA. Firm A has lower costs of pollution abatement than Firm B. OB. Firm B's total cost of abating more pollution (area 1) is less than the revenue it earns from selling the permits (areas 5+3). OC. Firm B's total cost of abating more pollution (areas 3+1) is less than the revenue it earns from selling the permits (areas 5+3+1). OD. Firm B can buy the permits at a lower price than Firm A OE. the revenue Firm B earns from selling permits (areas 3+1) is greater than the cost it incurs from abating more pollution (area 1). Dollars per unit Q₁ Qo Q2 Pollution Abatement ил Next -6°C Mostly clear MCA MCBarrow_forwardThe accompanying diagrams show the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. If the government requires each firm to abate Q units of pollution, the social costs of this abatement OA. could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount OB. could be reduced further if each firm was required to abate more. OC. could be reduced further if each firm was allowed to pollute more. OD. would be minimized. WOE could be reduced further if Firm 1 increased abatement and Firm 2 reduced its abatement by the same amount. Dollars 5 Firm 1 MC1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Abatement Q Firm 2 6- MC2 E 屈 Dollars -6°C Mostly clear Nextarrow_forwardThe diagram to the right illustrates a competitive industry in which there is a negative production externality. If a tax equal to $20/unit (i.e., a tax equal to the marginal external cost) is imposed, then the net social benefit will OA. fall by area A+ C. OB. rise by area B+C. OC. fall by area C. OD. rise by area B. OE. None of the above. W Marginal Benefit, Marginal Cost ($) 50 MCS MCp 45 35 30- 25 20 15 10- 5 0- 0 B D 10 20 30 40 50 60 70 80 90 100 110 Quantity -6°C Mostly clear Nextarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning