In the two-period model,the nature of the asymmetric information is that

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In the two-period model, the asymmetric information is that only borrowers know whether they are bad or not. This creates a problem for the lender because they cannot distinguish between good and bad borrowers and may offer the same interest rates to both, which may cause adverse selection. The borrower may take the loan and default on the repayment, causing losses for the lender. Therefore, lenders may use signaling or screening methods to obtain more information about the borrower's creditworthiness.

In the Two-Period Model,the Nature of the Asymmetric Information Is