Solutions to the moral hazard problem include

A) low net worth.
B) monitoring and enforcement of restrictive covenants.
C) greater reliance on equity contracts and less on debt contracts.
D) greater reliance on debt contracts than financial intermediaries.


B

Economics

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Multiplier effects occur when there is a change in spending which does not depend on income. Spending which does not depend on income is referred to as

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Marginal utility is always a positive number

Indicate whether the statement is true or false

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At any given price level, which of the following fiscal policies will decrease real GDP demanded, other things constant?

a. Increase in fiscal spending on infrastructure b. Increase in net taxes c. Increase in transfer payments d. Increase in money supply

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