Since Depositors,like Any Lender,only Receive Fixed Payments While the Bank

question 47

Multiple Choice

Since depositors,like any lender,only receive fixed payments while the bank keeps any surplus profits,they face the ________ problem that banks may take on too ________ risk.

• A)adverse selection;little
• B)adverse selection;much
• C)moral hazard;little
• D)moral hazard;much

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Definitions:

Central Tendency

The tendency to assign most ratees to middle-range job performance categories.

Halo Effect

A cognitive bias where the perception of one positive trait influences the perception of other traits.

Consensus Cues

Signals or indications that members of a group or audience are in general agreement about a particular idea or opinion.

Contrast Effect

Describes the enhancement or diminishment of perception, judgment, or behavior as a result of exposure to a contrasting reference point.