All of the following involve a moral hazard problem EXCEPT
A) an individual driving carelessly after buying a comprehensive insurance policy for a Ford Pinto.
B) the IMF bailing Mexico out of a financial crisis, with promises to do the same for other nations that might face financial problems.
C) making regular visits to your doctor because you know that you have full healthcare coverage.
D) the requirement of banking institutions that owners invest a substantial portion of their own capital in their bank.
E) membership in FDIC (Federal Deposit Insurance Corporation) by your local bank.
D
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The most effective redistribution programs provide assistance to the hard core poor and transitory assistance to the marginal poor without _____
a. creating dependency on welfare payments b. costing taxpayers too much c. changing the behavior of individuals d. a and c
When an economy is temporarily operating at an output that is beyond its full-employment rate,
a. excess supply in resource markets will eventually lead to lower resource prices, which will decrease costs and direct the economy toward full employment. b. excess demand in resource markets will lead to higher resource prices, which will increase costs and direct the economy toward full employment. c. lower wages and prices will quickly restore full employment. d. only restrictive fiscal policy will direct the economy back to full employment.