Author Question: Which of the following best illustrates the problem of moral hazard? A) a professional baseball ... (Read 83 times)

shofmannx20 · **on:** Jun 30, 2018

Which of the following best illustrates the problem of moral hazard?

A) a professional baseball team that consistently drafts poor players
B) an individual that is hiding a pre-existing condition from a health insurance provider
C) an increase in the level of one's income will lead to a decrease in demand for inferior goods
D) an economic agent that engages in risky behavior once a loan contract is signed

Question 2

In the monetary small open-economy model with a fixed exchange rate, an increase in the domestic price level has which impact on domestic money demand?

A) It increases it.
B) It decreases it.
C) It has no impact.
D) It depends.