Increasing the amount of information available to investors helps to reduce the problems of ________ and ________ in the financial markets
A) adverse selection; moral hazard
B) adverse selection; risk sharing
C) moral hazard; transactions costs
D) adverse selection; economies of scale
A
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Which of the following creates a demand for U.S. dollars?
A) Toyota, a Japanese firm, purchasing land in Texas B) a U.S. restaurant purchasing Mexican tomatoes C) a U.S. tourist catching a show in London D) a Japanese tourist catching a show in London
An increase in net exports will have a greater effect on equilibrium real GDP if the
A. marginal propensity to consume is smaller. B. average propensity to consume is larger. C. marginal propensity to save is larger. D. marginal propensity to save is smaller.
Two companies in a city provide insurance for cars—Company A and B. Company A pays 100% of the money required for repair in case of an accident, while Company B pays 70% of the total money required
A research agency has found that Company A's customers have more accidents. Which of the following explains this difference? A) Moral hazard B) Adverse selection C) The presence of positive externalities D) The presence of negative externalities
During World War II, whenever interest rates would rise and the price of bonds would begin to fall, the Fed would
A) lower reserve requirements. B) raise reserve requirements. C) make open market purchases of government securities. D) make open market sales of government securities.