Use the term below to write a paragraph about government policies to stabilize the economy.

monetary policy

According to the FBI's Uniform Crime Reports, approximately 1 in 379 cars was stolen in the United States in 2014. Beth owns a car worth $\$ 20,000$ and is considering purchasing an insurance policy to protect herself from car theft. For the following questions, assume that the chance of car theft is the same in all regions and across all car models.

a. What should the premium for a fair insurance policy have been in 2014 for a policy that replaces Beth's car if it is stolen? (Hint: In your calculation, round up to three decimal places.)

b. Suppose an insurance company charges $0.6 \%$ of the car's value for a policy that pays for replacing a stolen car. How much will the policy cost Beth?

c. Will Beth purchase the insurance in part b if she is risk-neutral?

d. Discuss a possible moral hazard problem facing Beth's insurance company if she purchases the insurance.

The Presley Corporation is about to go public. It currently has aftertax earnings of $\$7,200,000$, and 2,100,000 shares are owned by the present stockholders (the Presley family). The new public issue will represent 800,000 new shares. The new shares will be priced to the public at $\$25$ per share, with a 5 percent spread on the offering price. There will also be $\$260,000$ in out-of-pocket costs to the corporation. Compute the earnings per share immediately after the stock issue.

What foreign policy tools does the president have that could be used to deal with international terrorism?

In response to the terrorist attacks of September 11, 2001, the Fed started lowering the FFR target the following week. Congress was unable to agree on a program to help stimulate the economy until March 2002. How does this situation illustrate the effects of policy lags on monetary and fiscal policy?

What effect did Einstein's theory of relativity and Freud's theory of the unconscious have on the public?

Do economists have any particular expertise at making normative arguments? In other words, they have expertise at making positive statements (i.e., what will happen) about some economic policy, for example, but do they have special expertise to judge whether or not the policy should be undertaken?

Why were some isolationists skeptical of Roosevelt's foreign policy during his campaign for president?

What does crowding out have to do with the ability of expansionary fiscal policy to increase spending?

What alternatives did President Jackson have in shaping a policy to tackle the problem of Native Americans?

Analyzing Why do you think the government's policy of assimilation of Native Americans was a failure?

What evidence would support the theory that lower inflation results from contractionary monetary policy?

How much could you borrow on a 15-year old policy with a face value of $50,000?

Suppose the U.S. president wants an estimate of the proportion of the population who support his current policy toward revisions in the health care system. The president wants the estimate to be within .04 of the true proportion. Assume a 95 percent level of confidence. The president’s political advisors estimated the proportion supporting the current policy to be .60. a. How large of a sample is required? b. How large of a sample would be necessary if no estimate were available for the proportion supporting current policy?