Final answer:
The statement that replacing unemployment insurance with mandated worker self-insurance accounts is potentially beneficial because it would completely remove all adverse selection is false. Option B is correct.
Step-by-step explanation:
The statement that replacing unemployment insurance with mandated worker self-insurance accounts is potentially beneficial because it would completely remove all adverse selection is False.
Adverse selection is a term used in insurance to describe a situation where individuals with higher risks are more likely to seek insurance coverage than those with lower risks. Unemployment insurance is a type of government-provided insurance that helps individuals who have lost their jobs through no fault of their own.
By replacing unemployment insurance with mandated worker self-insurance accounts, the system would not completely remove adverse selection because individuals with higher risks of unemployment would still be more likely to choose to participate in the self-insurance program.
In a self-insurance program, individuals would be responsible for setting aside funds to cover their own unemployment benefits. This means that individuals who are more likely to become unemployed and require benefits would choose to participate in the program, while individuals who are less likely to need benefits would be more likely to opt out. This would create adverse selection within the self-insurance system.