Multiple Choice
If there are fewer bad borrowers in the population when there is asymmetric information
A) the interest rate spread declines.
B) the interest rate spread increases.
C) the value of collateral increases.
D) banks make positive profits.
E) good borrowers are worse off.
Correct Answer:
Verified
Correct Answer:
Verified
Q4: Collateralizable wealth is<br>A) wealth in non-tangible assets.<br>B)
Q5: If the value of collateral falls for
Q6: If the proportion of bad borrowers increases,<br>A)
Q7: In a pay-as-you-go system,<br>A) the young transfer
Q8: A collateral constraint captures the idea that<br>A)
Q10: The phenomenon that some consumers pay a
Q11: In a simple model of credit imperfections,
Q12: Social security is most likely to present
Q13: In the two-period model, the nature of
Q14: Asymmetric information in the credit market means