Because Don has health insurance, he is more likely to see the doctor when he has a cold. This is an example of
A) adverse selection.
B) moral hazard.
C) both moral hazard and adverse selection.
D) private information.
B
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Which combination of signals would be a strong indication that Fed policy is too expansionary and that a shift to a more restrictive policy is in order?
a. commodity prices are falling and the dollar is appreciating. b. commodity prices are rising and the dollar is depreciating. c. commodity prices are rising and the dollar is appreciating. d. commodity prices are falling and the dollar is depreciating.
If a bank has more interest-rate sensitive liabilities than interest-rate sensitive assets, an increase in the interest rate will cause profits to:
A. increase. B. remain constant. C. decrease. D. be negative, meaning there will not be profits, only losses.