When people who buy insurance change their behavior after the ...

[Mr. Wonderful]

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of
 
  A) economic irrationality. B) asymmetric information.
  C) adverse selection. D) moral hazard.

Question 2

What is a flexible exchange rate and how does it work?
 
  What will be an ideal response?

[T4T]

Answer to Question 1

D

Answer to Question 2

A flexible exchange rate policy is an exchange rate that is determined by demand and supply with no direct intervention in the foreign exchange market by the central bank. In this arrangement, the forces of supply and demand with no direct central bank intervention are the only factors that influence the exchange rate.