"In Britain women who bear children outside of marriage have a 'right' to a subsidized council home." The type of problem an economist will look for in this 'right' is that of:

arbitrage.
adverse selection.
free riding.
moral hazard.


Deposits at U.S. banks are insured by the FDIC, the Federal Deposit Insurance Corporation. In New Zealand, there is no deposit insurance. A government official there explained that deposit insurance "may actually increase the risks of bank failures in the first instance." Since the taxpayer is bearing some of the risk of bank failure, depositors and bank managers can take bigger financial risks. What term do economists use for this increased risk?

Speculation
Adverse selection
Rational ignorance
Moral hazard


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