Regarding the Reduction of the Impact of Moral Hazard by Insurers,which

question 62

Multiple Choice

Regarding the reduction of the impact of moral hazard by insurers,which of the following is true?

• A)Insurance companies lessen the impact of moral hazard by requiring that individuals with insurance make co-payments or pay a deductible.
• B)The only avenue for insurers seeking to reduce moral hazard is through the use of deductibles.
• C)It is not possible for insurers to reduce the risk of moral hazard,and this is seen as a risk of doing business.
• D)The only avenue for insurers seeking to reduce moral hazard is through refusing to insure those who have previously made multiple insurance claims.
• E)Insurers refuse to pay claims believed to result from the effects of moral hazard.

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Definitions:

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting the expenditure necessary to meet basic needs.

Saving Function

Is an economic concept describing the relationship between saving and income, indicating how changes in income levels affect the amount of money individuals save.

Consumption Function

A macroeconomic expression that defines the relationship between total consumer expenditures and gross national income, indicating how income affects spending patterns.

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount borrowed, charged by lenders to borrowers for the use of assets.