The difference between adverse selection and moral hazard is that
A) moral hazard happens at the time parties enter into a transaction; adverse selection occurs after the transaction takes place.
B) moral hazard is the motive that is behind one party entering into a transaction with another party. Adverse selection refers to the other party being harmed by the transaction.
C) moral hazard refers to the likelihood that a transaction will lead one party to be better off at the expense of the other party to the transaction. Adverse selection refers to the consequences of the transaction after it has occurred.
D) adverse selection happens at the time parties enter into a transaction; moral hazard occurs after the transaction takes place.
D
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The decision to go to graduate school is a rational one for a college student if the
A) cost is not too great. B) marginal cost exceeds the marginal benefit of graduate school. C) marginal benefit of graduate school exceeds the marginal cost. D) opportunity cost of graduate school equals zero. E) student carefully compared the social benefits of this decision.
In a recession, which unemployment rate is the highest?
A) the U-1 unemployment rate B) the U-6 unemployment rate C) the U-2 unemployment rate D) the U-3 unemployment rate E) None of the above answers is correct because the highest unemployment rate changes from one recession to the next.