Adverse Selection Occurs When Those ________ Likely to Get ________

question 12

Multiple Choice

Adverse selection occurs when those ________ likely to get ________ insurance payoffs are the ones who want to purchase insurance the most.

• A)least;large
• B)least;small
• C)most;large
• D)most;small

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Definitions:

Itemized Deduction

Deductions that taxpayers can claim for certain personal expenses, instead of taking a standard deduction. These can include expenses for healthcare, taxes, interest, and gifts to charity.

Foreign Tax Credit

A nonrefundable tax credit for income taxes paid to a foreign government, aimed at reducing double taxation.

Qualified Adoption Expenses

include necessary costs directly related to and for the principal purpose of the legal adoption of a child, which under certain circumstances, can be tax deductible.

Adoption Credit

A tax credit that offsets qualified adoption expenses, making adoption financially feasible for more families.