Question :
11) Governments often forced to bail out large banks to : 1377571
11) Governments are often forced to bail out large banks to prevent the entire economy from being affected adversely. This provision often encourages banks to invest in risky assets. This is an example of ________.
A) moral hazard
B) a positive externality
C) adverse selection
D) anchoring
12) Adam got a job in a multinational company. He was told during the orientation session that he will not be terminated for poor performance during the first six months of his work. Adam immediately decided to put minimum effort into the job during these months. His behavior is an example of ________.
A) a positive externality
B) moral hazard
C) the prisoners dilemma
D) the free-rider problem
13) Sarah initially used her cell phone mostly to make important business calls. However, when she was informed that henceforth her phone bills will be reimbursed by her employer, she started using her cell phone to make frequent calls to her friends and relatives. This behavior is an example of ________.
A) moral hazard
B) a negative externality
C) the prisoners’ dilemma
D) the free-rider problem
14) Employee theft is an example of ________.
A) adverse selection
B) moral hazard
C) herd behavior
D) internalizing of externalities
15) The government of Eduland provided generous unemployment benefits to all the unemployed workers. However, the new government which came into power reduced the amount of unemployment insurance paid to each worker. This increased the average number of hours spent daily by unemployed workers in looking for jobs. This suggests that ________ exists in the labor market in Eduland.
A) the problem of moral hazard
B) a tragedy of the commons
C) a pecuniary externality
D) a positive externality
16) The government of Genovia introduced an unemployment insurance that ensures full payment of former wages to unemployed workers. A study conducted a few months after the introduction of this policy showed that several unemployed workers in Genovia were not actively searching for work. Such behavior is an example of ________.
A) adverse selection
B) moral hazard
C) the prisoners’ dilemma
D) the free-rider problem
17) Christine works as a receptionist in an office. She is not supposed to use the Wi-Fi connection provided by the company to access social-networking websites. However, she often uses the Wi-Fi to access these websites since her browsing activities are not monitored by her employer. This is an example of ________.
A) adverse selection
B) moral hazard
C) a positive externality
D) a free-rider problem
18) Robert got a new job and relocated to a different city. He initially decided to stay in a small apartment close to his office. However, he decided to stay in a much bigger and costlier apartment when he found out that his employer will pay him a house rent allowance. This is an example of ________.
A) adverse selection
B) moral hazard
C) the prisoners’ dilemma
D) the free-rider problem
19) An employee in a department store often steals goods when other employees are not around. Since the store does not have a surveillance camera, the store manager is unable to monitor his activities. This behavior is an example of ________.
A) adverse selection
B) moral hazard
C) internalization of externalities
D) the paradox of thrift
20) Jane started eating more junk and taking less care of her health after she bought life insurance. Her behavior is an example of ________.
A) moral hazard
B) adverse selection
C) the paradox of thrift
D) the free-rider problem
