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:

Personal Unconscious

Carl Jung's term referring to all information that is present within an individual's mind, but not currently in conscious awareness.

Pre-human Ancestors

Earlier forms of life from which modern humans have evolved, typically including various extinct hominids and other primates.

Subconscious

Refers to the part of the mind that is not currently in focal awareness but can influence thoughts and behavior.

Major Archetypes

Fundamental, universal symbols or themes that recur across cultures and literature, often representing common aspects of human experience.