A Credit Union Faces A(n) ________ Problem When It Lends

question 105

Multiple Choice

A credit union faces a(n) ________ problem when it lends funds to a customer to remodel her home and the customer then opportunistically uses the funds for a gambling trip to Las Vegas.

• A) adverse selection
• B) moral hazard
• C) external cost
• D) free-rider

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Definitions:

Premises

Statements or propositions from which conclusions are drawn in logical arguments.

Pragmatics

The branch of linguistics that deals with the use and context of language, including how meaning is constructed in different social scenarios.

Cognitive Processes

Mental functions involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.

Grammatical Processes

The procedures through which grammatical structures of a language are formed and modified.