Adverse selection and moral hazard arise because of
A. mechanism designs for dealing with informational problems.
B. asymmetric information.
C. selection problems.
D. risk aversion.
Answer: B
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Identify an example of a flow variable
a. The volume of the federal government's debt b. The population of a country in a particular year c. The total amount of an individual's wealth d. The amount of sales tax collected per year e. The total amount of unemployment in an economy
In the long run, the Fed can change the inflation rate but not the unemployment rate
a. True b. False
If the federal government is running a budget deficit,
a. the national debt will decline. b. it will have to either raise taxes or reduce expenditures next year. c. the U.S. Treasury will finance the deficit by issuing additional bonds. d. the supply of money will increase and the general level of prices will rise.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.