What is moral hazard?
A) It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus.
B) It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.
C) It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
D) It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.
Answer: B
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Which of the following would lead to an increase in the demand for British pounds?
a. A declining interest in British goods b. A decrease in the U.S. interest rate relative to the British interest rate c. Expectations that the exchange rate will fall d. A decrease of the U.S. price level relative to the British price level e. A decrease in the exchange rate.
Long-run aggregate supply reflects
A. total production in the economy at full employment. B. the amount of natural resources in a nation. C. both production and spending in the economy. D. total spending in the economy at full employment.