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:
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Q7: In the two-period model,a bank
A) creates money.
B)
Q8: The default premium increases when there is
Q9: Limited commitment means
A) one cannot credibly promise
Q10: Asymmetric information means
A) some market participants have
Q11: If consumers use their house as collateral
Q13: In a simple model of credit imperfections,when
Q14: In a pay-as-you-go system,
A) the young tranfer
Q15: If the proportion of bad borrowers increases,
A)
Q16: Collateralizable wealth is
A) wealth in non-tangible assets.
B)
Q17: In the two-period model,the nature of the
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