The Concept of Moral Hazard Was Publicly Discussed in the Context

question 76

Multiple Choice

The concept of moral hazard was publicly discussed in the context of the 2007-2008 financial crisis because

• A)it was claimed that moral hazard was necessary to prevent large U.S.financial institutions from going bankrupt.
• B)it was argued that the U.S.government should invoke moral hazard to sustain the financial sector.
• C)it was feared that government bailouts of financial institutions would encourage the institutions to continue their risky behaviour.
• D)it was feared that government bailouts of financial institutions would reduce competition in financial markets.
• E)it was feared that the U.S.government was taking advantage of its special knowledge in the financial markets.

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Definitions:

Differential Theory

suggests individual differences in behavior, traits, and intelligence result from genetic variation or environmental factors.

Psychotherapeutics

The treatment of mental or emotional disorders through psychological methods rather than medical interventions.

Perception

The process by which individuals select, organize, and interpret sensory input to form a meaningful picture of the world.

Sense of Smell

The ability to detect odors through a specialized organ, typically the nose, which is a significant part of human and animal sensory systems.