Bank X Had a Reputation for Asking Few Questions When

question 301

Multiple Choice

Bank X had a reputation for asking few questions when it provided loans. Five years later, the majority of the loans were not repaid. This is because the bank had failed to address the

• A) adverse selection problem.
• B) moral hazard problem.
• C) contrary selection problem.
• D) free-rider problem.

---

Definitions:

Testes

The male reproductive organs that produce sperm and hormones, including testosterone.

Uterine Contractions

The rhythmic tightening and relaxing of the uterine muscles, occurring most frequently during childbirth.

Placenta

An organ that develops in the uterus during pregnancy, providing oxygen and nutrients to the growing baby while removing waste products from the baby's blood.

Umbilical Cord

The umbilical cord is a flexible cord-like structure containing blood vessels that connect a fetus to the placenta, providing oxygen and nutrients while removing waste.