Why do insurance companies in many developing countries not offer full health insurance coverage to older applicants?
What will be an ideal response?
Older applicants are more likely to fall ill than younger applicants. Therefore, if the insurers were to offer full insurance coverage to these customers, they will require a higher premium. If the premium is high, low-risk individuals are less likely to buy the insurance, leading to the problem of adverse selection.
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In the figure above, 10 percent of income in country C is distributed to the
A) richest 10 percent of the households. B) poorest 10 percent of the households. C) poorest 30 percent of the households. D) poorest 70 percent of the households.
Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 5000, P = 2.0, and ?e = .03. If Y were to increase from 4000 to 5000, then the real interest rate would increase by how many percentage points?
A) 2 B) 4 C) 5 D) 7