People Hold Money for Transactions Purposes, Precautionary Reasons, and Asset

question 45

True/False

People hold money for transactions purposes, precautionary reasons, and asset purposes.

---

Definitions:

Adverse Selection

A situation where asymmetric information leads one party in a transaction to select undesirable risks without the other party's knowledge.

Deductible

The amount paid out of pocket by the policyholder before an insurance company pays a claim.

Co-payment

A fixed payment made by a patient for a covered service, under a health insurance plan, at the time the service is provided.

Adverse Selection

A situation where asymmetric information results in high-risk parties being more likely to engage in agreements than low-risk parties.