Janie convinces her uncle Seymour that she is on the Dean's list each semester and asks him to lend her $5,000 to help pay for her college tuition for the upcoming year, assuring him that she will be able to pay him back as soon as she graduates and
gets a job. In reality, Janie has flunked out of college, has spent all her savings on food for her 40 ferrets, and wants to use the money to bail her boyfriend out of jail. Not being honest with her uncle when asking for the loan is an example of ________, and spending the borrowed money to pay her boyfriend's bail is an example of ________. A) moral hazard; asymmetric information
B) moral hazard; the principal-agent problem
C) adverse selection; moral hazard
D) the principal-agent problem; adverse selection
C
You might also like to view...
If depository insurance exists, bank managers may make riskier loans than they would have otherwise, which is an example of
A) adverse selection. B) regulatory lag. C) irrational behavior. D) moral hazard.
If there are steady decreases in aggregate supply, the economy will experience
A) a slow decrease in price levels. B) demand-side inflation. C) an expansionary gap. D) supply-side inflation.
A permanent reduction in planned real investment spending leads to
A) a more than proportional increase in real GDP. B) a more than proportional decrease in real GDP. C) a less than proportional decrease in real GDP. D) a proportional decrease in real GDP.
Of the several ways that the United Auto Workers can increase the wages of its members,
a. none can also increase employment b. only direct negotiation of a wage above the competitive level can also increase employment c. only restricting the supply of labor can also increase employment d. only increasing the demand for labor can also increase employment e. only binding arbitration can also increase employment