The purpose of collateral and restrictive covenants is to reduce ________ in debt contracts
A) adverse selection
B) transactions costs
C) moral hazard
D) loan amounts
C
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
An increase in the production of capital goods
A) must increase the current production of consumer goods. B) must decrease the future production of consumer goods. C) shifts the production possibilities frontier inward in the future. D) shifts the production possibilities frontier outward in the future.
If a monopolist's price is $50 per unit and its marginal cost is $25, then
A) to maximize profit the firm should continue to produce the output it is producing. B) to maximize profit the firm should decrease output. C) to maximize profit the firm should increase output. D) Not enough information is given to say what the firm should do to maximize profit.
Which of the following is not assumed before the implementation of a policy? a. The appropriate policy is selected instantaneously
b. The appropriate policy is implemented instantaneously. c. Once implemented, the policy works as advertised. d. The policy, once implemented, works in no time. e. Lags that reduce the effectiveness of the policy are predictable.