If insurance did not exist in the United States, which of the following might reasonably be expected to happen?
A) Banks would lower their interest rates on car loans.
B) Moral hazards would increase.
C) The occurrence of perils would decrease.
D) In general, only small businesses would be able to survive.

Question

Quizplus · Accepted Answer

Without insurance, people would be more likely to engage in risky behavior since they would not have to bear the full financial consequences of their actions. This is known as moral hazard. Therefore, it would be reasonable to expect that moral hazards would increase in the absence of insurance. None of the other options are likely outcomes of the absence of insurance. Banks' interest rates on car loans are not necessarily related to insurance, the occurrence of perils would depend on other factors such as natural disasters, and the survival of small businesses would be influenced by a wide range of factors beyond insurance.

If Insurance Did Not Exist in the United States, Which