Which Is an Example of Moral Hazard

question 242

Multiple Choice

Which is an example of moral hazard?

• A) Only people with very high risk of default on loans borrow from banks.
• B) Drivers have less incentive to avoid accidents after getting auto insurance.
• C) When one bank fails,other banks become more cautious in lending.
• D) People living along the Gulf Coast are more likely to buy flood insurance.

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Definitions:

Credit Specialist

A professional who advises on matters related to credit and debt management, often helping clients optimize their credit scores.

Online Presence

The visibility and reputation an individual, organization, or brand has on the internet.

Social Networking Websites

Online platforms that enable users to create public profiles and form connections with other users based on shared interests, activities, backgrounds, or real-life connections.

Behavioral Interview

A candidate is asked how he or she handled a particular problem in the past.