When Financial Markets and Institutions Are Not Efficient in Matching

question 4

Multiple Choice

When financial markets and institutions are not efficient in matching savers and borrowers,

• A)interest rates fall, which discourages saving even further.
• B)interest rates fall, which discourages investment even further.
• C)resources are lost.
• D)investment rises.

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Definitions:

Media Richness Hierarchy

A framework that ranks communication media according to their capacity to convey information effectively, based on aspects such as immediate feedback, cues, personalization, and language variety.

Basic Communication Process

The fundamental steps involved in the exchange of information between a sender and a receiver, including encoding, medium of transmission, decoding, and feedback.

Effective Writing

The skill of conveying ideas and information in writing in a clear, concise, and engaging manner for the intended audience.

Effective Listening

A communication technique that involves actively understanding, interpreting, and responding to the message being communicated.