Moral Hazard Problems Arise When

question 26

Multiple Choice

Moral hazard problems arise when

• A)lenders have difficulty in distinguishing between good and lemon firms.
• B)when a downturn in economic activity makes repaying loans difficult for borrowers.
• C)borrowers default on loans.
• D)borrowers have an incentive to conceal information.

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Definitions:

Homophobia

An irrational or phobic fear of gay men and lesbian women. See also anti-gay prejudice; heterosexual bias.

Phobic Fear

An irrational and intense fear of a specific object, situation, or activity, leading to significant anxiety and avoidance behaviors.

Sexual Harassment

Unwanted or unwelcome sexual behavior, which can include physical or verbal actions, creating an offensive environment.