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.

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Definitions:

Mild Euphoria

A state of feeling happy, excited, or elated, which is less intense than full-blown euphoria.

Large Doses

Quantities of a substance much greater than usual, often implying amounts that significantly exceed the recommended or customary level.

Respiration

The process by which living organisms take in oxygen and release carbon dioxide, involving the exchange of gases between the organism and its environment.

Coma

A deep state of prolonged unconsciousness in which a person cannot be awakened; fails to respond normally to painful stimuli, light, or sound; lacks a normal wake-sleep cycle; and does not initiate voluntary actions.