The Following Is an Example of the Moral-Hazard Problem: Homebuyers

question 62

True/False

The following is an example of the moral-hazard problem: Homebuyers do not properly evaluate the risks involved in buying a home because they are assuming government will bail them out of a bad mortgage as it has done before.

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Definitions:

Efficiently

The ability to achieve a desired result without wasting materials, time, or energy.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, leading to the necessity of making choices.

Economize

The act of reducing waste or optimizing the use of resources to save money or achieve greater efficiency.

Affluent

Describes individuals, communities, or nations with a high level of wealth and income, typically measured by the standard of living and purchasing power.