From the standpoint of the economy as a whole,the role of
A)the interest rate is to make sure that the price of bonds increases over time.
B)diversification is to eliminate market risk.
C)insurance is to reduce the risks inherent in life.
D)insurance is to spread risks around more efficiently.

Question

Quizplus · Accepted Answer

Insurance helps to spread risks around more efficiently, reducing the potential impact of losses on any single individual or business. This can have a positive effect on the economy as a whole by promoting stability and reducing the likelihood of systemic shocks. A and B are incorrect because neither the interest rate nor diversification are primarily responsible for the benefits mentioned in the question. C is only partially correct, as insurance does reduce risks, but it does so by spreading them around more effectively rather than eliminating them outright.

From the Standpoint of the Economy as a Whole,the Role