An example of the moral hazard problem in international investment would be that
A) those seeking funds for the riskiest projects are amongst those most actively seeking the funds.
B) the recipients of the funds may use the funds for riskier projects than the approved project.
C) government officials may demand higher than the usual amount of bribes.
D) those seeking the funds are dishonest.
B
You might also like to view...
A barter system of payment is
A) different from a money system of payment because money does not require a double coincidence of wants. B) similar to a money system of payment because both require a double coincidence of wants. C) different from a money system of payment because the barter system is a better unit of account. D) similar to a money system of payment because both use one asset as a unit of account. E) similar to a money system of payment because both are used as stores of value and units of account.
If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is
A) that there is no change in the quantity of money. B) much larger than if the securities were sold to a bank. C) much smaller than if the securities were sold to a bank. D) the same as if the securities were sold to a bank. E) None of the above answers is correct.