The government bail-out of large institutions creates the problem of moral hazard, which means that these large firms will:
A. Not be able to pay back the bail-out money
B. Have an incentive to make highly risky investments
C. Now have to play it safer to reduce their risks
D. Be limited in terms of the securities and services that they get involved in
B. Have an incentive to make highly risky investments
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Traveler's checks are included in M1 but not in M2
Indicate whether the statement is true or false
For years, economists believed that market structure explained the ability of some firms to earn economic profits. Today, economists and business strategists put greater emphasis on
A) the number of countries in which a firm conducts business and the number of employees the firm has in each country. B) the number of years a firm has been in business and the average price of the products sold by the firm. C) the characteristics of individual firms and the strategies their managements use to continue to earn economic profits. D) the size of a firm relative to the industry average and the number of firms in the domestic industry.