CourseCourseConceptConceptDocumentDocument

Edexcel A-Level Economics AS 1.3.5 5a Moral Hazard Can Occur Questions

Practise identifying moral hazard in insurance and banking, including how expected government support can encourage riskier lending and investment.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • identify moral hazard from insured consumers or banks taking greater risks
  • link expected government support for banks to riskier lending and investing decisions

Edexcel A-Level Economics AS 1.3.5 5a Moral Hazard Can Occur Questions question 1

[Maximum number: 1]

Before the global financial crisis of 2008, commercial banks expected that their governments would not allow them to fail because of the threats to the rest of the economy. This meant that some staff at banks took excessive risks when lending and investing.

Which one of the following concepts best describes the behaviour of staff at these banks?

A

Inertia

B

The free-rider problem

C

Moral hazard

D

Market bubble

All question bank results loaded