In Response to the Financial Crisis That Began in 2007

question 140

Multiple Choice

In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future.This illustrates

• A)the adverse selection problem.
• B)the moral hazard problem.
• C)the principal-agent problem.
• D)logrolling.

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Definitions:

Connecting Points

Locations or nodes within a network where different routes or lines come together, facilitating movement or communication.

Expected-Rate-Of-Return

The anticipated percentage of gain or loss an investment is projected to generate, considering the risks involved.

Connecting Points

In the context of networks or transportation, refers to nodes or locations that link various segments or paths, facilitating movement or communication.