The Problem for Lenders, That a Borrower Has the Incentive

question 32

Multiple Choice

The problem for lenders, that a borrower has the incentive to take chances once the loan is made, is an example of

• A) adverse selection.
• B) moral hazard.
• C) both of the above.
• D) neither of the above.

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Definitions:

Reuptake

Process by which neurotransmitters are taken back into the synaptic vesicles.

Pain-controlling Chemicals

Substances produced by the body, or administered externally, that can reduce or block the sensation of pain.

Endorphins

Biochemicals produced in the brain that act as natural painkillers and mood enhancers.

Androgens

A group of hormones that play a role in male traits and reproductive activity; present in both males and females.