Moral Hazard

question 181

Multiple Choice

Moral hazard:

• A)occurs when incentives are distorted because an individual knows more about his or her own actions than other people do.
• B)is a term used to describe the bonuses paid for particularly hazardous jobs (such as firefighting).
• C)is a term used synonymously with value judgment.
• D)refers to the questionable morality of price gouging in hazardous times (e.g. ,in the presence of famines or floods).

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Definitions:

Welfare Benefits

Government-provided assistance programs designed to support the health, safety, and well-being of citizens, particularly those who are in poverty, disabled, or elderly.

Personal Responsibility

The principle of taking accountability for one's actions and their consequences, often emphasizing individual initiative and self-discipline.

Welfare Policy

A set of government strategies aimed at providing assistance to individuals and families in need, to ensure a basic standard of living.

Apartheid

A social policy or structure of segregation and economic and political discrimination against non-European groups in South Africa.