Moral Hazard Arises When People Behave Recklessly Because They Know

question 54

True/False

Moral hazard arises when people behave recklessly because they know they will be saved if things go wrong.

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Definitions:

Beneficial

Something that promotes or enhances well-being, providing a positive or advantageous effect.

Oral Stop Payment

A verbal request made to a financial institution asking them to prevent the payment or processing of a check or financial instrument.

Written Stop Payment

A formal written notice given to a bank instructing it not to pay out funds under a specific check or transaction.

Recourse

A right or legal means to obtain repayment, compensation, or remedy in the event of a breach of contract or agreement.