(Solved):Economists disagree with constant government bailouts of large struggling companies because it can give it a rise to : a. Moral hazard. b. Adverse selection. c. Lazy managers. d. None of the ab… View Answer…

 

Question

Economists disagree with constant government bailouts of large struggling companies because it can give it a rise to :

a. Moral hazard.

b. Adverse selection.

c. Lazy managers.

d. None of the above.

 

EXPERT ANSWER

The correct answer is A, moral hazard.

In economics, moral hazard is a situation where a party indulges in risky action knowing it will not bear the consequences of failure. For example, if someone gets generous vehicle insurance (covering every possible damage

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