If a government requires domestic banks to lend to certain industries, creating a situation in which the firms know they will receive funding no matter how they use the funds, then the government has created a problem called: Select one: a. structural moral hazard. b. herding behavior. c. contagion. d. regulatory arbitrage.
If a government requires domestic banks to lend to certain industries, creating a situation in which the firms know they will receive funding no matter how they use the funds, then the government has created a problem called: Select one: a. structural moral hazard. b. herding behavior. c. contagion. d. regulatory arbitrage.
Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles
Section: Chapter Questions
Problem 7E
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If a government requires domestic banks to lend to certain industries, creating a situation in which the firms know they will receive funding no matter how they use the funds, then the government has created a problem called:
Select one:
a. structural moral hazard.
b. herding behavior.
c. contagion.
d. regulatory arbitrage.
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