Analysis of adverse selection indicates that financial intermediaries, especially banks
A) have advantages in overcoming the free-rider problem, helping to explain why indirect finance is a more important source of business finance than is direct finance.
B) despite their success in overcoming free-rider problems, nevertheless play a minor role in moving funds to corporations.
C) provide better-known and larger corporations a higher percentage of their external funds than they do to newer and smaller corporations which rely to a greater extent on the new issues market for funds.
D) must buy securities from corporations to diversify the risk that results from holding non-tradable loans.
A
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Conditional input demand curves always slope down, but unconditional input demand curves can slope up.
Answer the following statement true (T) or false (F)
Which of the following is included in physical capital?
a. Roads and bridges b. A university graduate in physics c. An astrophysicist d. A high school diploma or college degree e. A successful entrepreneur
Patents are most likely to infringe on innovation:
A. for products that incorporate many different technologies into a single product. B. of simple, easy-to-copy products. C. in the pharmaceutical industry. D. when they cause creative destruction.
When the anticipated rate of inflation declines, the real rate of interest
A. increases exponentially. B. is not affected. C. decreases. D. increases.