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During the 1990s, some Western banks were far too willing to lend large amounts to companies that were already overleveraged. The banks knew the government would save them if these loans were foreclosed. What type of activity does this represent?

Respuesta :

Answer: Moral Hazard

Explanation:

Moral hazard can occur when a party in a contract can take excessive risks and not suffer the consequences of their actions.

Banks lending large amount of money when they are over leveraged is an example of engaging in risky actuviites.

I hope my answer helps.

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