Moral Hazard and Adverse Selection Problems Increased in Prominence in the 1980s

question 20

Multiple Choice

Moral hazard and adverse selection problems increased in prominence in the 1980s

• A)as deregulation required savings and loans and mutual savings banks to be more cautious.
• B)following a burst of financial innovation in the 1970s and early 1980s that produced new financial instruments and markets,thereby widening the scope for risk taking.
• C)following a decrease in federal deposit insurance from $100,000 to $40,000.
• D)as interest rates were sharply decreased to bring down inflation.

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Definitions:

Null Hypothesis

A statement in statistics that suggests there is no significant difference or relationship between specified populations, any observed difference being due to sampling or experimental error.

Wilcoxon Signed Rank Test

A non-parametric statistical test used to compare two related samples to determine if their population mean ranks differ.

Null Hypothesis

The presumption of no association or effect between variables until evidence indicates otherwise, used as a benchmark for statistical significance testing.

Cholesterol Levels

Measures of the total amount of cholesterol in the blood, including low-density and high-density lipoprotein cholesterol.