Recall the Application About How Having Car Insurance Affects Driving

question 53

Multiple Choice

Recall the Application about how having car insurance affects driving behavior to answer the following
question(s) .
-Recall the Application. The idea that an insured driver, who bears less than the full cost of a collision, will drive less carefully than an uninsured driver is an example of

• A) asymmetric information.
• B) adverse selection.
• C) moral hazard.
• D) a thin market.

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Definitions:

Contractionary Fiscal Policy

Economic measures employed by a government to reduce its expenditures or increase taxes with the aim of slowing down an overheated economy.

Potential Output

The highest level of real gross domestic product (GDP) that can be sustained over the long term without increasing inflation, reflecting the maximum productive capacity of an economy.

Short-Run Aggregate Supply

The total production of goods and services in an economy at different price levels in the short-term, considering wages and resource prices as sticky.

Short-Run Aggregate Supply

The total production of goods and services in an economy at different price levels over a short period, during which some production costs are fixed.