Final answer:
The Guaranteed Underwriting System (GUS) is a system used by the USDA for guaranteeing loan approvals, specifically for USDA rural development loans. It is not related to insurance, customer relationships, or inventory tracking.
Step-by-step explanation:
The Guaranteed Underwriting System (GUS) is neither a method for underwriting insurance policies nor for managing customer relationships or tracking inventory. It specifically refers to an automated system used by the U.S. Department of Agriculture (USDA) to streamline the mortgage underwriting process for USDA rural development loans. So, the correct answer to the student's question would be option 2) A system used for guaranteeing loan approvals. GUS allows lenders to enter loan application information, and it then assesses the applicant’s creditworthiness and determines eligibility for loan guarantees.
Insurance is a method of protecting a person from financial loss by making regular payments to an insurance entity, which in turn compensates a policyholder who suffers significant financial damage from an event covered by the policy. A money-back guarantee is a promise by the seller to refund the buyer’s money under certain conditions. Moral hazard is a situation where people are less likely to protect against an event occurring because they have insurance against it.