A Financial Crisis Occurs When an Increase in Asymmetric Information

question 45

Multiple Choice

A financial crisis occurs when an increase in asymmetric information from a disruption in the financial system ________.

• A) causes severe adverse selection and moral hazard problems that make financial markets incapable of channelling funds efficiently
• B) allows for a more efficient use of funds
• C) increases economic activity
• D) reduces uncertainty in the economy and increases market efficiency

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Definitions:

Open Transaction

Any financial transaction that has been initiated but not yet completed or settled.

Customer Based

Customer based refers to a business strategy or perspective centered on understanding and addressing the needs, preferences, and behaviors of customers.

Confidential

Information meant to be kept secret or private from those not authorized to see it.

QuickBooks Enterprise

A comprehensive business management software designed for small to medium-sized businesses, offering advanced accounting features.