Multiple Choice
Why do higher interest rates increase adverse selection problems in the loan market?
A) Higher interest rates reduce the gains from economies of scale.
B) As interest rates rise, the creditworthiness of the average loan applicant declines.
C) Higher interest rates reduce information problems in the loan market.
D) At higher interest rates fewer investment projects are profitable.
Correct Answer:
Verified
Correct Answer:
Verified
Q2: The assumption of asymmetric information means that<br>A)borrowers
Q3: Financial intermediaries reduce transactions costs by<br>A)charging fees
Q4: Venture capital firms attempt to overcome the
Q5: Which of the following is NOT true
Q6: Recent research has shown that<br>A)countries with investor
Q7: Use the analysis presented in this chapter
Q8: Small savers face<br>A)high transactions costs in financial
Q9: Credit rationing refers to<br>A)the increase in the
Q10: The "lemons problem" exists in the market
Q11: Which of the following is an example