What Is Moral Hazard

question 54

Multiple Choice

What is moral hazard?

• A)It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus.
• B)It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.
• C)It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
• D)It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

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Definitions:

Increased Earnings

A situation or trend where an individual's or organization's income or profits grow over time.

Hostile Work Behavior

Actions or behaviors in the workplace that create a threatening or antagonistic environment.

Calling

A strong urge or inclination towards a particular career or vocational path often associated with a sense of purpose.

Work Satisfaction

The degree to which employees feel contented and fulfilled by their jobs.