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QUESTION 3 [20 MARKS] (a) Based on the concept of asymmetric information, illustrate the difference between adverse selection and moral hazard. (8 Marks) (b) Outline

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QUESTION 3 [20 MARKS] (a) Based on the concept of asymmetric information, illustrate the difference between adverse selection and moral hazard. (8 Marks) (b) Outline the purpose of having the financial safety nets. Discuss TWO (2) examples of the safety net measures that Malaysia currently adopts. (6 Marks) (c) Anticipate TWO (2) drawbacks from the adverse selection on financial safety nets. (6 Marks)

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