The possibility that a borrower might engage in riskier behavior after a loan is made is called
A) adverse selection.
B) liability aversion.
C) moral hazard.
D) the risk of default.
Ans: C) moral hazard.
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The United States is an example of a mixed economy.
Answer the following statement true (T) or false (F)
Which of the following explains why a bank holds reserves?
I. Banks are required by law to hold reserves. II. To meet depositors' currency withdrawals III. To use them to make loans to households A) I only B) II only C) I and II D) I, II, and III E) I and III
Refer to the Article Summary. Implementing a negative interest rate policy, as was advocated by the president of the Federal Reserve Bank of Minneapolis, would be an example of ________ monetary policy designed to ________ aggregate demand
A) contractionary; increase B) expansionary; increase C) expansionary; decrease D) contractionary; decrease
As products become less differentiated:
A. consumers are less willing to switch in response to price changes and competition becomes more intense. B. consumers are more willing to switch in response to price changes and competition becomes more intense. C. consumers are less willing to switch in response to price changes and competition becomes less intense. D. consumers are more willing to switch in response to price changes and competition becomes less intense.