Which of the following is NOT true of moral hazard?
A) It would not exist in a world of perfect information.
B) It arises because borrowers typically know more than lenders.
C) It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants.
D) It describes a lender's problem in verifying borrowers are using their funds as intended.
Correct Answer:
Verified
Q17: The presence of transactions costs and information
Q18: Financial intermediaries emerged
A)to make loans to governments.
B)to
Q19: Economies of scale are
A)charges to savers and
Q20: Why did one prominent economist state that
Q21: When there's asymmetric information, who tends to
Q23: You own a 2007 Ford Explorer. Although
Q24: To help offset the costs from loan
Q25: The assumption of symmetric information means that
A)borrowers
Q26: Which of the following is NOT an
Q27: Generally, when there is asymmetric information
A)a lender
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