Moral Hazard Problems Increased in Prominence in the 1980s

question 102

Multiple Choice

Moral hazard problems increased in prominence in the 1980s

• A) as deregulation required savings and loans and mutual savings banks to be more cautious.
• B) following a burst of financial innovation in the 1970s and early 1980s that produced new financial instruments and markets, thereby widening the scope for risk taking.
• C) following a decrease in federal deposit insurance from $100,000 to $40,000.
• D) as interest rates were sharply decreased to bring down inflation.

Recognize the cultural and gender differences in the prevalence of depression.

Distinguish between neurotic, mood, somatoform, and dissociative disorders.

Understand the concept and different definitions of poverty.

Recognize the factors contributing to income and wealth inequality.

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Definitions:

Increase

A rise in the quantity, level, or number of something.

Basis

Basis refers to the difference between the spot price of a commodity and the futures price of the same commodity, which can indicate market expectations of future price movements.

Profit

The financial gain realized when the revenue generated from business activities exceeds the expenses, taxes, and costs.

Convergence

The movement of the price of a futures contract towards the spot price of the underlying asset as the delivery date approaches.