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RISK POOLING: Combining the uncertainty of individuals into a calculable risk for large groups. For example, you may or may not contract the flu this year. However, if you're thrown in with 99,999 other people, then health-care types who spend their lives measuring the odds of an illness, can predict that 1 percent of the group, or 1,000 people, will get the flu. The uncertainty is that they probably don't know which 1,000 people, they only know the number afflicted. This little bit of information is what makes risk pooling possible. If the cost is $50 per illness, then an insurance company can insure your 100,000-member group against flu if they collect $50,000 ($50 x 1,000 sick people), or 50 cents per person. By agreeing to pay the cost of each sick person in exchange for the 50 cent payments, the insurance company has effectively pooled the risk of the group.
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IMPLEMENTATION LAG The time lag that occurs after a government policy designed to correct an economic problem has been selected and the actual execution of the policy. The implementation lag is based the time it takes for government agencies, which can be slow and methodical, to carry out the designated policy. This "inside lag" is one of four policy lags associated with monetary and fiscal policy. The other two "inside lags" are recognition lag and decision lag, and one "outside lag" is implementation lag. All four policy lags can reduce the effectiveness of business-cycle stabilization policies and can even destabilize the economy.
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"A successful man is one who can lay a firm foundation with the bricks others have thrown at him. " -- David Brinkley, newsman
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The Wide, Wide World Of FOREIGN TRADETwo blocks directly south of the Mega-Mart Discount Emporium we'll find that Natural Ned's Nursery and Garden Center is having a grand opening celebration. I'd like to saunter over to check out their sundials -- a valuable, and long sought after acquisition for my backyard garden. In fact, Natural Ned's Nursery and Garden Center has a new shipment of sundials imported from the sundial capital of the world -- the Republic of Northwest Queoldiola. If I'm going to get a sundial, I should get the best, right? Northwest Queoldiola produces the finest, least expensive, and most technologically advanced sundials in the world. However, Mega-Mart Discount Warehouse Super Center has an ample supply of good old American-made sundials. They're a little more expensive and not quite as good, but they're made in the U. S. of A. by good old Americans. What a dilemma!
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale trying to buy either a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki or decorative garden figurines. Be on the lookout for door-to-door salesmen.
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This isn't me! What am I?
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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SAFEX
South African Futures Exchange
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