IAI Actuarial Core Principles · Business Economics · Relationship between economics and business
Which of the following questions would a life insurer's economist most naturally address using macroeconomic analysis rather than microeconomic analysis?
The question about a repo rate rise and GDP slowdown affecting investment returns and new business is macroeconomic. It concerns economy-wide aggregates and policy variables, whereas the other options deal with pricing, staffing or costs within one firm or market, which are microeconomic matters.
- AHow price-sensitive are young professionals to a change in term plan premium?
- BHow will a rise in the repo rate and a slowdown in GDP growth affect the insurer's investment returns and new business volumes?Correct
- CShould the insurer price its health rider higher than a competitor's rider?
- DHow many agents should the insurer hire in Pune next quarter?
- What is the marginal cost of servicing one additional policy?
Explanation
Macroeconomics deals with aggregates such as GDP growth, interest rates and inflation and their economy-wide effects. The repo rate and GDP slowdown option is the only one about such aggregates. The other options concern pricing, hiring or costs at the level of a single firm or market, which are microeconomic.
Did you get it right without looking?
One question tells you little. A timed set on Relationship between economics and business shows your real accuracy, how long you take and where you lose marks.
More Relationship between economics and business questions
- In a pure command economy, which of the following best describes how decisions on what to produce and how to allocate resources are made?
- A Mumbai general insurer's chief executive must decide whether to use a team of ten analysts on a motor pricing review or on a health produc…
- A large Indian life insurer is owned by dispersed shareholders but run by professional managers who pursue rapid growth in premium income ev…
- A mixed economy such as India's is moving towards greater market orientation. Which of the following developments would most clearly represe…
- Which of the following is a normative statement in economics?
- Which feature best distinguishes microeconomics from macroeconomics in analysing an Indian bank's business environment?