Health insurance markets have a problem with insuring people who are "poor health risks" while many people who are "good health risks" do not buy insurance. This problem is an example of
A) moral hazard.
B) adverse selection.
C) market signaling.
D) asymmetric information.
Answer: B
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An increase in the stock of capital contributes to economic growth because it increases
A) federal funds rates. B) labor productivity. C) tax revenues. D) the reserves of the banking system.
Which of the following government provisions would help increase the accumulation of knowledge capital?
A) education subsidies B) patents C) copyrights D) All of the above are correct.
Suppose the United states production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German wage doubles, but U.S. wages do not change at all. We now know that
A) the United States has no comparative advantage. B) Germany has a comparative advantage in butter. C) the United States has a comparative advantage in butter. D) Not enough information is given. E) Germany gains a comparative advantage in widgets.
If the economy is experiencing less than full-employment, the Keynesian school recommends that the government:
a. do nothing to stimulate the economy. b. undertake fiscal policy to stimulate aggregate demand. c. undertake fiscal policy to stimulate aggregate supply. d. balance the budget to stimulate aggregate demand.