Which of the following is not true of adverse selection?
A. It describes the problem a lender faces in identifying loan applicants as good or bad risk borrowers.
B. It arises because borrowers have more information than lenders regarding their creditworthiness.
C. It arises if lenders try to charge an average price to all applicants.
D. It exists because information is perfect.
Answer: D
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An increase in real net exports leads to an increase in real GDP. Further
A) real consumption spending increases while real investment spending decreases. B) real government spending decreases to offset the increase in real net exports. C) real consumption spending and real saving increase. D) real consumption spending increases but real saving does not change.
A concert-goer who had been willing to pay up to $150 for a ticket, but who pays a scalper $125 for one, experiences a consumer surplus of $25
Indicate whether the statement is true or false
Trade, whether between individuals or nations, will not take place unless
A. there is one commodity and one currency. B. at least one participant expects to gain from the trade. C. both participants expect to gain from the trade. D. each side has an absolute advantage.
The amount by which the quantity demanded exceeds the quantity supplied at a given price is a
A. Balance-of-payments deficit. B. Market surplus. C. Balance-of-payments surplus. D. Market shortage.