In a financial market where information is symmetric:
A. there would be no adverse selection.
B. the ability to obtain information is available to only one party.
C. there would be moral hazard.
D. one party to a transaction knows information the other party does not.
Answer: A
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The level of saving in the United States has historically been low relative to the level of domestic investment. Based on this information, we would expect that
A) U.S. private saving is less than its public saving. B) U.S. capital inflows are negative. C) U.S. net foreign investment has been relatively high. D) U.S. net exports have been relatively low.
Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home is an example of
a. a human capital differential. b. a compensating differential. c. signaling theory. d. the superstar phenomenon.
Which of the following is used to measure the value of goods and services for GDP?
a. bushels b. centimeters c. dollars d. tons
The variability of business profits:
A. Helps explain the instability of investments over time B. Does not affect investment spending, which depends on expected profits not current profits C. Explains why the durability of capital goods is variable D. Causes the variations in consumption spending over time