A Problem with the Too-Big-To-Fail Policy Is That It ________

question 15

Multiple Choice

A problem with the too-big-to-fail policy is that it ________ the incentives for ________ by big banks.

• A)increases;moral hazard
• B)decreases;moral hazard
• C)decreases;adverse selection
• D)increases;adverse selection

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Definitions:

Principles

Fundamental truths or propositions that serve as the foundation for a system of belief or behavior or for a chain of reasoning.

Economic Growth

An increase in the production of goods and services in an economy over a period, often measured by the rise in Gross Domestic Product (GDP).

Environmental Preservation

The practice of safeguarding natural resources and ecosystems to maintain biodiversity and ecological health, often involving protection from pollution and overexploitation.

Neoclassical

pertains to an economic theory that focuses on supply and demand as driving forces behind the production, pricing, and consumption of goods and services.