Which of the following bank-related policies of the Fed fosters huge moral hazard problems:

Question

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The too-big-to-fail policy of the Fed fosters huge moral hazard problems because it incentivizes large banks to take excessive risks and engage in risky behavior, knowing that they will be bailed out by the government in case of failure. This creates a situation where banks are not held accountable for their own actions, undermining market discipline and increasing the likelihood of future financial crises.

Which of the Following Bank-Related Policies of the Fed Fosters