Quiz 35

Question 1

Which of the following are limitations to informal insurance?

Answer 1

👉🏽 a) the pool of available funds is often limited, and so the system may boot be able to cope with larger shocks

👉🏽 b) informal insurance systems typically only work when participants know each other well

👉🏽 c) participants are often exposed to the same types of risk

Question 2

True or False: Individual shocks have to be at least partly independent for community risk-sharing to work.

Answer 2

👉🏽 True. Everyone can’t face the same risks or the insurance scheme won’t work

Question 3

TRUE or FALSE: Having the option to default can be viewed as just another form of insurance.

Answer 3

👉🏽 True

Question 4

A variable interest fund can be ___________ for insurance markets

Answer 4

👉🏽 good or bad