Government bailouts of failing businesses, like banks during the 2008 ﬁnancial crisis, will tend to reduce
the motivation among entrepreneurs to make prudent decisions in dealing with business risk.

Question

Quizplus · Accepted Answer

This is because if entrepreneurs know that the government will bail them out if they fail, they may take more risks and make less prudent decisions since they won't bear the full consequences of their failures.

Government Bailouts of Failing Businesses, Like Banks During the 2008