________ refers to inefficient actions induced by policy instruments that cause people not to bear the full consequences of their actions.

Question

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Moral hazard is a situation where policy instruments allow individuals or organizations to avoid bearing the full consequences of their actions, leading to inefficient behavior. For example, if insurance companies fully compensate car owners for damages incurred in accidents, the car owners may drive more recklessly, knowing that they will not bear the full cost of their actions. This can lead to increased accidents and higher costs for the insurance company.

________ Refers to Inefficient Actions Induced by Policy Instruments That