Economists disagree with constant government bailouts of large,struggling companies because it can give a rise to
A)Moral hazard
B)Adverse selection
C)Lazy managers
D)None of the above

Question

​Economists disagree with constant government bailouts of large,struggling companies because it can give a rise to
A)​Moral hazard
B)Adverse selection
C)Lazy managers
D)​None of the above

Quizplus · Accepted Answer

Constant government bailouts of large, struggling companies can create moral hazard, which refers to the idea that individuals or companies may take on greater risks or engage in reckless behavior knowing that the government will bail them out if they fail. This can create a situation where companies are not held responsible for their actions or decisions, leading to a distorted market and potentially even more failures. Adverse selection and lazy managers are not directly related to the issue of government bailouts.

​Economists Disagree with Constant Government Bailouts of Large,struggling Companies Because

Economists Disagree with Constant Government Bailouts of Large,struggling Companies Because