If a Borrower's Net Worth Increases

question 92

Multiple Choice

If a borrower's net worth increases:

• A) the likelihood of moral hazard also increases.
• B) the borrowers are likely to want to take less risk.
• C) the moral hazard risk for the potential lenders decreases.
• D) the supply of loans decreases.

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Definitions:

Negative Reinforcement

A behavior modification technique that involves the removal of an unpleasant stimulus to increase the likelihood of a desired behavior being repeated.

Extinction

In behavioral psychology, the process where a conditioned response decreases in frequency and eventually disappears when the stimulus is no longer presented.

Latent Learning

A form of learning that occurs without any obvious reinforcement of the behavior or associations that are learned, often becoming apparent under different conditions.

Tolman's Time

Refers to the theories and research of Edward C. Tolman, particularly his concepts of cognitive maps and latent learning in psychology.