The Policy of ________ Exacerbated ________ Problems as Savings and Loans

question 52

Multiple Choice

The policy of ________ exacerbated ________ problems as savings and loans took on increasingly huge levels of risk on the slim chance of returning to solvency.

• A) regulatory forbearance; moral hazard
• B) regulatory forbearance; adverse selection
• C) regulatory stringency; moral hazard
• D) regulatory stringency; adverse selection

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Definitions:

Unforeseeable

Impossible to predict or anticipate due to lack of information or inherent unpredictability.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution, due to limitations in time, resources, or information.

Optimal

describes the most advantageous condition or level of efficiency that can be achieved under specific circumstances.

Acceptable

Describes standards or conditions that are generally agreed upon as satisfactory or adequate.