The So-Called American System

question 69

Multiple Choice

The so-called American System

• A)involved the use of high tariffs to protect new industries.
• B)reduced costs and revolutionized production through labor-saving innovations in manufacturing.
• C)referred to the establishment of a common market for the western hemisphere.
• D)embraced free trade and the absence of tariffs.
• E)was reminiscent of the medieval guild system of wage and price controls.

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Definitions:

Insurance

A financial product offering protection against a loss, providing compensation in the event of specific financial damages or risks occurring.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to purchase insurance or contracts than low-risk ones.

Auto Transmission

An automatic transmission is a type of motor vehicle transmission that can automatically change gear ratios as the vehicle moves, freeing the driver from having to manually shift gears.

Moral Hazard

The situation where one party engages in risky behavior knowing that it is protected against the consequences of that behavior, often because another party will bear those consequences.