Question

In the United States a government agency known as FEMA (Federal Emergency Management Agency) pays out funds to areas and people affected by natural disasters. Following Hurricane Sandy, which flooded the low-lying parts of lower Manhattan, FEMA paid out funds to help pay for damages in the area. There is currently a proposal to construct a unit complex on the Outer Banks in South Carolina. This is an area that is likely to be increasingly affected by flooding and hurricanes due to climate change. Knowing FEMA will be there to protect owners in the event of a future natural disaster, no plans are made to install additional protections measures for the unit complex.

1. How would the presence of FEMA affect the likelihood of the project going ahead? . Type in D for decrease, R for remains the same, C for increase, or U for unable to tell. 

2. The above answer demonstrates the occurrence of which economic concept? . Type in M for Moral hazard, P for Principal agent issue, C for Competitive market, L for Lemons Model, A for Adverse selection. 

3. Elle wishes to be employed by FEMA. However, when they request from her some academic and professional references she is unable to provide them and is not hired. Why did FEMA require the references? . Type in F for Costly to Fake principal, M for Moral hazard, D for adverse selection, P for Principal agent problem, A for Asymmetric Information.