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To reduce the size of a country's national debt, a government could potentially take all of the following actions EXCEPT

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Which of the following is a true​ statement?A.The FDIC has reduced the problem of moral hazard but not the problem of adverse selection.B.The FDIC has reduced the number of depositors who have lost​ savings, but in doing​ so, has inadvertently encouraged banks to make riskier loans.C.Moral hazard is a problem that occurs before a transaction takes place when asymmetric information is a problem.D.Adverse selection occurs after a transaction has taken place in insurance markets.

To eliminate the deficit​ (and halt the growth of the net public​ debt), a politician suggests that​ "we should tax the​ rich." The politician makes a simple arithmetic calculation in which he applies the higher tax rate to the total income reported by​ "the rich" in a previous year. He says that this is how much the government could receive from increasing taxes on​ "the rich." This argument has been proved wrong because of all the following​ statements, exceptA.that increasing the marginal tax rate on the​ "rich" has so far produced unimpressive results.B.that the​ "rich" will have more incentive to incorporate themselves and pay a lower corporate profit tax rate.C.that the​ "rich" will use a​ deferred-compensation plan to shift income to future years when their tax rates may be lower.D.that taxing​ "the rich," since they have higher​ earnings, is the answer to solving the problem of a growing deficit.

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