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17 May, 03:39

A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which problem banks face in lending?

a. adverse selection

b. moral hazard

c. interest rate

d. risk liquidity.

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Answers (1)
  1. 17 May, 04:18
    0
    b. moral hazard

    Explanation:

    If a person borrow from bank to buy car but actually he borrow to pay lottery. in this case the person will face Moral Hazards.
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