Government regulations designed to reduce the moral hazard problem include

Question

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Laws that force firms to adhere to standard accounting principles can help reduce the moral hazard problem by increasing transparency and accountability in financial reporting. This can help prevent firms from hiding risky financial activities and provide more accurate information to investors and regulators.

B, C, and D are not effective in reducing moral hazard. Light sentences for fraud do not deter individuals from engaging in risky behavior, verification subsidies can be costly and may not necessarily uncover fraudulent activities, and licensing restrictions may restrict competition and innovation, which could lead to other economic inefficiencies.

Government Regulations Designed to Reduce the Moral Hazard Problem Include