How does collateral help to reduce the adverse selection problem in credit market?
What will be an ideal response?
Collateral is property that is promised to the lender if the borrower defaults thus reducing the lender's losses. Lenders are more willing to make loans when there is collateral that can be sold if the borrower defaults.
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If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of
A) rational ignorance. B) price discrimination. C) price gouging. D) arbitrage.
The United States dollar has NOT been officially convertible to gold by international traders since
A) 1930. B) 1944. C) 1971. D) 1995.
Think of the quantity theory of money: If M = 200, P = 100, and Q = 10, then V is
a. 20 b. 2 c. 10 d. 5 e. 2,000
Other things being equal, an increase in wages paid to workers in firms making portable power banks will cause
A) the quantity of portable power banks demanded to increase. B) the quantity of portable power banks supplied to decrease. C) the supply of portable power banks to decrease. D) the demand for portable power banks to decrease.