Which of the Following Is an Example of Moral Hazard

question 101

Multiple Choice

Which of the following is an example of moral hazard?

• A) When a family's belongings are protected against theft and they take special care to look after the house.
• B) An individual buys a new auto insurance policy which includes a special payment if the car skids on the ice and the person then begins driving recklessly on ice.
• C) When a country expects assistance in the event of a currency crisis and therefore takes special care to avoid such a crisis.
• D) When decision-makers expect special assistance in the event of an unfavorable outcome and their behavior changes in such a way to avoid that outcome entirely.
• E) When a person with health insurance takes great care not to catch a serious cold.

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Definitions:

AV Node

A part of the heart's electrical system which acts as a gateway between the atria and ventricles, ensuring the timing of heartbeats.

Electrical Impulse

A sudden surge of energy in one direction, often used in the context of neurons firing and the transmission of signals through the nervous system.

Muscle Contraction

The process of generating tension within a muscle fiber through the actin and myosin filaments sliding past each other.

Wandering Baseline

A term used in electrocardiography to indicate an inconsistent or shifting baseline on the ECG trace, which can complicate the interpretation of cardiac rhythms.