Asymmetric information in the credit market means that
A) the bank cannot distinguish bad borrowers from good borrowers.
B) the bank cannot prevent consumers from defaulting on their loans.
C) the default rate on loans is excessively high.
D) borrowers can borrow from financial institutions other than banks.
E) consumers can only borrow from banks.
Correct Answer:
Verified
Q12: Asymmetric information means
A) some market participants have
Q13: When consumers lend at a lower rate
Q14: The default premium increases when there is
Q15: In the two-period model, a bank
A) creates
Q16: If the value of collateral falls for
Q18: A default premium is the interest rate
Q19: In the two-period model, the nature of
Q20: If consumers use their house as collateral
Q21: In a pay-as-you-go social security system, everyone
Q22: Pay-as-you-go social security works in situations where
A)
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