Which of the Following Is NOT True of Moral Hazard

question 5

Multiple Choice

Which of the following is NOT true of moral hazard?

• A)It would not exist in a world of perfect information.
• B)It arises because borrowers typically know more than lenders.
• C)It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants.
• D)It describes a lender's problem in verifying borrowers are using their funds as intended.

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Definitions:

Domestic Abuse

Domestic abuse is a pattern of behavior in a relationship that is used to gain or maintain power and control over an intimate partner, and can encompass physical, emotional, sexual, or financial harm.

Elderly

Pertaining to individuals who are significantly advanced in age, typically those regarded as senior citizens.

Conflict Theory

A sociological perspective that views social life as a competition for limited resources, emphasizing the struggles between groups or classes.

Competition for Resources

The rivalry among individuals, organizations, or nations to secure scarce resources for their own use.