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s2008m [1.1K]
4 years ago
5

Identify the following situation currently faced by the World Bank as adverse selection or moral hazard.

Business
1 answer:
nevsk [136]4 years ago
6 0

<u>Solution and Explanation:</u>

<u>Moral Hazard </u>– It is a situation when a  firm or an individual modify their behaviour once the person gets what one was desired to achieve; example, insurance, funding, etc.

<u>Adverse selection </u>- The firm does not information on the consumer, and, sells the product at lower price assessing a lower risk when more information would have made the seller ask for a higher price

a) Moral Hazard

The country changes its project plan after the World Bank extends the loan; if the World Bank has put in conditions that it be used only for a canal, then the loan cannot be used

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