Which of the Following Is NOT an Example of the Adverse

question 142

Multiple Choice

Which of the following is NOT an example of the adverse selection problem?

• A) Buyers in a market for used cars must choose from an undesirable selection of used cars.
• B) An insurance company must choose one price for its coverage for both high-cost and low-cost people.
• C) Commercial banks would rather use credit rationing than raising interest rates in the presence of excess demand for loans.
• D) An insured motorist drives more recklessly.

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Definitions:

Rule of Law

The principle that all individuals, institutions, and entities are accountable to laws that are publicly promulgated, equally enforced, and independently adjudicated.

Doctrines

Established principles or policies in law or religious beliefs that are taught and accepted as authoritative.

Administrative Law

The body of law that governs the activities of administrative agencies of government, including rules, regulations, procedures, and decisions.

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree.