What Would Be the Consequence of a Law That Forced

question 41

Multiple Choice

What would be the consequence of a law that forced patients to pay all of the costs for preventive care?

• A) The adverse selection problem would become more intense.
• B) The moral hazard problem would become more intense.
• C) The adverse selection problem would become less intense.
• D) The moral hazard problem would become less intense.
• E) Both the moral hazard and adverse selection problems would become more intense.

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Definitions:

Regressive Tax

A tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers.

Federal Tax Receipts

The revenue collected by the federal government from various taxes like income tax, corporation tax, and other levies.

Individual Income Taxes

Taxes levied on the income of individuals or households, varying with income levels.

Social Insurance Taxes

Taxes collected by a government to fund social security programs, providing benefits for retirees, the disabled, and the unemployed.