Author Question: Moral hazard is A) the tendency for people to enter into agreements in which they can use their ... (Read 75 times)

bobypop · **on:** Jun 29, 2018

Moral hazard is

A) the tendency for people to enter into agreements in which they can use their private information to their own advantage and to the disadvantage of the less informed party.
B) when one of the parties to an agreement has an incentive after the agreement is made to act in a manner that brings additional benefits to himself or herself at the expense of the other party.
C) a situation in which only bad quality items are bought and sold.
D) an action taken outside a market that conveys information that can be used by that market.

Question 2

Assuming velocity is constant, a 10 percent increase in the quantity of money leads to a 10 percent increase in nominal GDP in both the short run and the long run.

Indicate whether the statement is true or false