The worldwide recession of the late 2000s
A) happened despite strict government regulation.
B) was caused by excessively high interest rates.
C) can be characterized as a moral hazard problem.
D) caused the collapse of the U.S. housing market.
E) began with the collapse of the Asian currencies.

Question

Quizplus · Accepted Answer

The worldwide recession of the late 2000s can be characterized as a moral hazard problem because it was caused by excessive risk-taking by financial institutions, which were encouraged to do so by the belief that they would be bailed out by the government if they got into trouble.

The Worldwide Recession of the Late 2000s