John Takes Out a Student Loan at a Bank but Spends

question 12

Multiple Choice

John takes out a student loan at a bank but spends his money in Las Vegas to play at the casino.This situation is an example of

• A)moral hazard.
• B)moral suasion.
• C)adverse selection.
• D)fraud.

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Definitions:

Introductory Stage

The initial phase in the product life cycle where a new product is launched into the market.

Free Drinks

Complimentary beverages offered by establishments, events, or organizations as a form of hospitality or promotion.

Premiums

Money paid for insurance coverage.

Rebates

A partial refund to someone who has paid too much for tax, rent, or a utility. In marketing, it often refers to a refund given for the purchase of a product.