Moral Hazard and Adverse Selection Problems Increased in Prominence in the 1980s

question 34

Multiple Choice

Moral hazard and adverse selection problems increased in prominence in the 1980s

• A) as deregulation opened up more avenues for savings and loans and mutual savings banks to take on more risk.
• B) following a burst of financial innovation in the 1970s and early 1980s that produced new financial instruments and markets, thereby widening the scope for risk taking.
• C) following an increase in federal deposit insurance from $40,000 to $100,000.
• D) because of all of the above.
• E) because of only A and B of the above.

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Definitions:

Planning Phase

The initial stage in a project or activity where objectives are defined, strategies are developed, and tasks are outlined to achieve specific goals.

Conciseness

The use of the fewest words possible to convey an idea effectively, avoiding redundancy and verbosity.

Main Idea

The central point or the most important concept in a piece of writing or communication.

Proofreading A Message

The process of carefully reviewing a written message for errors in grammar, spelling, punctuation, and formatting before it is shared.