Moral Hazard Occurs If One Party to a Transaction Takes

question 58

Multiple Choice

Moral hazard occurs if one party to a transaction takes actions that the trading partner ________ and that ________ the benefits the trading partner receives from the trade.

• A) observes; affect
• B) observes; do not affect
• C) cannot observe; affect
• D) cannot observe; do not affect

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Definitions:

Rational Means

Methods or actions that are based on logic or reasoning rather than emotion or desire.

Psychosexual Stages

Five stages of personality development proposed by Freud and tied to the sexual development of the child.

Erogenous Zones

Erogenous zones are areas of the body that elicit sexual arousal when touched or stimulated.

Sigmund Freud

An Austrian neurologist who founded the discipline of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.