The concept of 'Adverse Selection' in insurance markets leads to:
A. Lower-risk individuals being more likely to purchase insurance
B. Higher-risk individuals being more likely to purchase insurance
C. No effect on the pool of insured
D. Only moral hazard problems
Answer: Option B
Solution (By JKSSB Mock Tests)
Because high-risk individuals have a greater incentive to buy insurance at any given premium, the insured pool tends to be riskier than the population average, driving up premiums and potentially causing market unraveling.
Explanation:
The IMF provides temporary financial support to countries facing balance of payments difficulties, conducts economic surveillance and offers technical assistance. Long-term project finance is the domain of the World Bank.
Explanation:
Indian agriculture is characterised by predominance of small and marginal land holdings, dependence on monsoon, low productivity and labour intensity.
No comments yet. Be the first to start the discussion!