Chapter 1 Basic Economic Ideas and Resource Allocation

Question 1

Four Essential Functions of Money

Answer 1

1. A medium of exchange
2. A unit of account
3. A standard for deferred payment
4. A store of wealth

Question 2

Moral Hazard

Answer 2

the tendency for people who are insured or protected to take greater risks

Question 3

Adverse Selection

Answer 3

misinformation in part of the person asking for insurance

information failure results in someone who is unsuitable to receive health care to get it