Adverse selection is a barrier to financing global growth because
A) of the differences between financing using loans, portfolio investment and foreign direct investment.
B) if investors have trouble identifying high-risk firms they may be unwilling to lend funds to creditworthy firms.
C) firms sometimes have trouble determining whether they need funds or not.
D) there is the possibility that the funds are used for riskier behavior than the lender agreed to.
B
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What, according to Akerlof, causes the price difference between a one-year old used car and an unsold car manufactured by the same company in the same year?
What will be an ideal response?
The fact that money can be exchanged for goods reflects money's role as a
A) cause of inflation. B) medium of exchange. C) unit of account. D) store of value.
In 2008 the money wage rate in Ireland increased by 4 percent while the price level increased by 8 percent. As a result, Ireland's
A) short-run aggregate supply curve shifted leftward. B) short-run aggregate supply curve shifted rightward. C) long-run aggregate supply curve shifted rightward. D) short-run and long-run aggregate supply curves shifted rightward.
Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year. What is the economic profit for the firm described above?
A. -$90,000. B. $0. C. $200,000. D. $90,000.