In the context of insurance, moral hazard refers to:
A. the tendency for people to behave in a riskier way after they have acquired insurance.
B. the tendency for high-risk individuals to seek out more insurance than low-risk individuals.
C. when people organize themselves in a group to collectively absorb the cost of the risk faced by each individual.
D. when risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual.
A. the tendency for people to behave in a riskier way after they have acquired insurance.
You might also like to view...
Situation 35-2 ? Dan and Ann live in the same community and both can participate in two activities, producing and stealing. Refer to Situation 35-2. Ann spends 8 hours of each day producing and 1 hour of each day stealing. It is probably the case for her that
A. at some point the MB/MC ratio for producing fell below the MB/MC ratio for stealing. B. her MB/MC ratio for producing was always greater than her MB/MC ratio for stealing. C. her MB/MC ratio for producing never changed, no matter how much or how little she produced. D. her MB/MC ratio for stealing never changed, no matter how much or how little she stole. E. There is not enough information to answer the question.
Suppose the required reserve ratio is 0.1 and Linda deposits $4,000 in cash at the College State Bank. If the bank held no excess reserves before Linda's deposit and now increases its reserves by $500, which of the following is true? a. The bank must have lent out an additional $4,000. b. $500 is the value of the bank's required reserves
c. The bank now has excess reserves of $100. d. Both the bank's assets and its liabilities rise by $500. e. The bank now has $500 in excess reserves.
When the Fed buys government bonds on the open market from commercial banks, the
a. assets of these banks fall b. assets of the Fed falls c. assets of the banks rise d. liabilities of the bank rise e. liabilities of the bank fall
Which of the following is an example of excess supply:
A. Price = $500, demand = 500, supply = 300 B. Price = $700, demand = 300, supply = 500 C. Price = $600, demand = 400, supply = 400 D. Price = $400, demand = 600, supply = 200