Moral hazard is an important concern of insurance arrangements because the existence of insurance
A) provides increased incentives for risk taking.
B) is a hindrance to efficient risk taking.
C) causes the private cost of the insured activity to increase.
D) creates an adverse selection problem but no moral hazard problem.
A
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In the above figure, point C represents
A) a recessionary gap. B) a full-employment equilibrium. C) an inflationary gap. D) a decrease in aggregate demand.
The natural unemployment rate increased significantly during the 1980s and the 1990s
Indicate whether the statement is true or false
In which of the following countries are taxes (measured as a percentage of GDP) the lowest?
a. Canada. b. France. c. Sweden. d. The United States.
The production possibilities frontier provides an illustration of the principle that
a. trade can make everyone better off. b. governments can sometimes improve market outcomes. c. people face trade-offs. d. people respond to incentives.