This Concept Regularly Arises in Insurance Markets

question 167

Multiple Choice

This concept regularly arises in insurance markets. It is described as a situation in which a person buys insurance against some risk and subsequently takes actions that increase the risk.

• A)Moral Hazard.
• B)Insurance Premium Imbalance.
• C)Reckless Theory.
• D)Asymmetric Information.
• E)None of these.

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Definitions:

Inflation Expectations

The rate at which individuals expect the general price level of goods and services to change over a period of time.

Short-run Phillips Curve

A representation in economics that shows an inverse relationship between the rate of unemployment and the rate of inflation in the short-term.

Unemployment

The condition wherein people who are able and willing to work and are actively looking for work cannot secure a job.

Contractionary Monetary Policy

A monetary policy strategy used by central banks to reduce inflation and cool an overheated economy by raising interest rates or increasing reserve requirements.