The term 'Moral Hazard' in economics refers to: MCQ with Answer and Explanation

The term 'Moral Hazard' in economics refers to:
A. Equal risk sharing
B. Perfect information in markets
C. Change in behaviour after obtaining insurance
D. Asymmetric information before a contract
Answer: Option C
Solution (By JKSSB Mock Tests)
Moral hazard occurs when one party takes more risks because another party bears the cost, typically after a contract (e.g., insurance) is in place. Adverse selection occurs before the contract.

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Practice More Economy Set 1 Questions

Question #1
The Marginal Standing Facility rate is generally set how much above the repo rate?
A. 0.50 percentage points
B. 2.00 percentage points
C. 1.00 percentage point
D. 0.25 percentage points

Correct Answer: Option D


Explanation:
The MSF rate is usually 0.25 percentage points above the repo rate.

This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a feature of monopolistic competition?
A. Perfect knowledge and free entry without costs
B. Single seller
C. Homogeneous product
D. Product differentiation

Correct Answer: Option D


Explanation:
Monopolistic competition is characterised by product differentiation, a large number of firms, free entry and exit, and some degree of price control by firms.

This question belongs to: Economy GK Economy Set 1
Question #3
The 'Swachh Bharat Mission' aims to achieve:
A. only urban sanitation
B. only rural roads
C. only water supply
D. open defecation free India and solid waste management

Correct Answer: Option D


Explanation:
Swachh Bharat Mission aims at open defecation free India and solid waste management.

This question belongs to: Economy GK Economy Set 1