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A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which problem banks face in lending? a.adverse selection b.moral hazard c.interest
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A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which problem banks face in lending?

a.adverse selection
b.moral hazard
c.interest rate
d.risk liquidity.

User Florian Reischl
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1 Answer

6 votes

Answer:

b.moral hazard

Step-by-step explanation:

If a person borrow from bank to buy car but actually he borrow to pay lottery. in this case the person will face Moral Hazards.

User Samuel Stiles
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