Which of the Following Would Not Address the Moral Hazard

question 79

Multiple Choice

Which of the following would not address the moral hazard problem?

• A)Establish strict regulations of the banks
• B)Design systems so that necessary financial transactions stayed within regulated banks
• C)Allow the government to take over the policy-making decisions of the Federal Reserve
• D)Separate banks from other financial institutions

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Definitions:

Police

A body of officers representing the civil authority of government, responsible for maintaining public order and safety, enforcing laws, and preventing, detecting, and investigating criminal activities.

Rotten Apple Theory

A theory suggesting that corrupt or unethical individuals within an organization are isolated instances and not representative of systemic organizational issues.

Police Corruption

The abuse of police authority for personal or organizational gain.

Whistle-Blowing

Unveiling information or activities that are thought to be unlawful, unethical, or incorrect inside an entity.