In the Case of Insurance, _______________ Arises Because the Buyers

question 65

Multiple Choice

In the case of insurance, _______________ arises because the buyers of insurance have more information about _____________________than the insurance company does.

• A) moral hazard; their risk rating
• B) actuarial prices; their high-risk or low-risk status
• C) adverse selection; the risk group they belong to
• D) fundamental laws; actuarial fairness

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Definitions:

Appointed

A term referring to individuals who have been selected and assigned roles or positions, often within a governmental or organizational setting, without requiring an election or competitive selection process.

Elected

Refers to the process of choosing or selecting someone to hold a public office or some other position by voting.

Open-Market Operations

Purchases and sales of government securities by the Fed in an effort to influence the money supply.

Government Securities

Government securities are financial instruments issued by a government to raise funds from investors, promising to pay back the borrowed amount with interest, including bonds, treasury bills, and notes.