Because Information Is Scarce

question 71

Multiple Choice

Because information is scarce

• A)helps explain why equity contracts are used so much more frequently to raise capital than are debt contracts.
• B)monitoring managers gives rise to costly state verification.
• C)government regulations,such as standard accounting principles,have no impact on problems such as moral hazard.
• D)developing nations do not rely heavily on banks for business financing.

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Definitions:

Cognitive Approach

A psychological perspective focusing on mental processes such as perception, memory, and problem-solving.

Negative Thoughts

Refers to harmful, often critical or self-doubting thoughts that can affect one's mood and well-being.

Aggressive Scripts

Aggressive scripts are learned frameworks for behavior and thought that guide aggressive responses to certain situations, often acquired through observation or experience.

Practiced

Repeated performance or exercise of an activity or skill to acquire or maintain proficiency in it.