A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as Blank______.Multiple choice question.unbalanced burdena debt pendulummoral hazardadverse selection
Question
A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as Blank______.Multiple choice question.unbalanced burdena debt pendulummoral hazardadverse selection
Solution
The correct answer is "moral hazard". This term is used in economics to describe a situation where one party is motivated to take on more risk because they know that the potential costs or burdens will be borne, at least in part, by another party.
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