Question

1. Insurance or a guarantee to cover losses may create a moral hazard a. which is an increase in the chance that a random accident will occur. b. which is an incentive to decreased risk-taking by the insured. c. which is an incentive to increase risk-taking by the insurance authority. d. which is an incentive to increase risk-taking by the insured. 2. Most of the banks in the U.S. are _________ chartered, __________ of the Federal Reserve System and are insured by the _________. a. state; members; FDIC-DIF b. national; members; OCC-DIF c. state; nonmember; FDIC-DIF d. national; member; FRB-DIF

Answer 1

1.) Which is an incentive to increase risk taking by the insured.

Moral hazard is a term used in Economics and can be defined as the potential that an insured may behave differently from the way they would behave if they were fully exposed to risk.

2.) State; Members; FDIC-DIF

Most banks in the US are state chartered.

Members of the Federal Reserve System.

They are insured by the FDIC-DIF