Essay
Explain how moral hazard could arise in the following situations.
a. The federal government offers flood insurance for homes.
b. An NBA (National Basketball Association) player signs a long-term guaranteed contract.
c. The government lengthens the time to collect unemployment benefits from 26 to 99 weeks.
d. In an area where the roads are frequently snow-covered and icy, a person trades in her rear-wheel drive sports car for a four-wheel-drive SUV.
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a. This insurance could encourage people...View Answer
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