Identify at least two problems a borrower would face if banks were not required to disclose the information that they are currently required to make available.
What will be an ideal response?
One problem that quickly comes to mind would be all of the hidden fees that a bank could charge for a checking account or a loan application. In addition, the customer would face very high search cost in the sense that they would have to ask a lot of questions of each institution to uncover these hidden costs. Another problem is the way that interest is calculated for savings accounts and loans. For example, is the interest being paid on a savings account based on the average balance or is it based on the balance that exists at the beginning or end of the month? Also, the interest rate charges on the loan, is it expressed as an annual rate or is it calculated using some other formula? The disclosure laws that banks face are designed to reduce these costs to customers and make the comparing of prices across banks easier.
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The buyers pay all of a tax when the demand is
A) perfectly elastic. B) more elastic than the supply. C) more inelastic than the supply. D) unit elastic. E) perfectly inelastic.
What is an inferior good?
A) a product of low quality that we do not want to purchase B) a product for which demand increases when income increases, and demand decreases when income decreases C) a product for which demand increases when income decreases, and demand decreases when income increases D) a product that is complementary E) a product that is a substitute for another, better good
If the federal government placed a 50 cent per pack excise tax on cigarette manufacturers, and if as a result, the price to consumers of a pack of cigarettes went up by 40 cents, the:
a. actual burden of this tax falls mostly on consumers. b. actual burden of this tax falls mostly on manufacturers. c. actual burden of the tax would be shared equally by producers and consumers. d. tax would clearly be a progressive tax.
When consumers or businessmen stop collecting information to make decisions at the point where marginal cost of data collection equals the marginal utility of the data, economists would call the decisions based on existing data
a. perfect decisions. b. optimally imperfect decisions. c. joint decisions. d. rent seeking.