Consider the Following Two Situations

question 7

Multiple Choice

Consider the following two situations.Irene accepts a job where she will be driving in dangerous traffic,so she seeks auto insurance.After Victor buys health insurance,he visits the gym less frequently.Which of these person's actions illustrates moral hazard?

• A)both Irene's and Victor's
• B)Irene's but not Victor's
• C)Victor's but not Irene's
• D)neither Victor's nor Irene's

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Definitions:

Corporate Taxes

Taxes imposed on the income or profit of corporations and businesses by the government.

Nationalizing Industries

The process by which a government takes control of private industries and transforms them into state-owned enterprises.

Social Security Act

A U.S. law enacted in 1935 that was designed to provide retirement income and assist the unemployed, as well as provide support for the disabled and families with dependent children.

Unemployment Compensation

A government program that provides financial payments to individuals who have lost their jobs through no fault of their own, as a means to alleviate financial hardship during periods of unemployment.