The Moral Hazard Problem Refers to

question 14

Multiple Choice

The moral hazard problem refers to

• A)difficulty banks have in satisfying the government's reserve requirement.
• B)depositors making a run on the bank, even though the bank is insured.
• C)banks taking on more risk in their lending because they know their depositors are insured.
• D)banks issuing bank notes that compete with the government's currency.

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Definitions:

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Supportive Behavior

Actions that express understanding, caring, and encouragement to positively affect the emotional state of others.

Empathic

Pertaining to the ability to understand and share the feelings of another person.

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