Which of the Following Statements Is Correct

question 72

Multiple Choice

Which of the following statements is correct?

• A)A high-risk person is more likely to apply for insurance than a low-risk person because a high-risk person would benefit more from insurance protection.
• B)A low-risk person is more likely to apply for insurance than a high-risk person because a low-risk person would benefit more from insurance protection.
• C)Insurance companies can fully guard against the problem of adverse selection,but they cannot fully guard against the problem of moral hazard.
• D)Insurance companies can fully guard against the problem of moral hazard,but they cannot fully guard against the problem of adverse selection.

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Definitions:

Racial-Ethnic Families

Family units formed by individuals of different racial or ethnic backgrounds, focusing on their cultural practices, heritage, and lineage.

Economic Recessions

Periods of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Cushions of Wealth

Cushions of Wealth describe financial buffers or savings that can protect individuals or families during economic downturns or personal financial crises.

Extended Unemployment

A situation where an individual remains unemployed for a long period, often requiring additional government support.