Moral Hazard

question 63

Multiple Choice

Moral hazard:

• A)increases the ability of markets to allocate risk efficiently.
• B)decreases the ability of markets to allocate risk efficiently.
• C)has no impact on the ability of markets to allocate risk efficiently.
• D)encourages the provision of 100% insurance coverage.

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Definitions:

Reaction

A process in which substances interact, causing the formation of new substances with different properties.