Kevin Borrowed Some Money from Hi Interest Bank,telling the Loan

question 24

Multiple Choice

Kevin borrowed some money from Hi Interest Bank,telling the loan officer that he intended to use the money to make repairs to his home.After getting the loan,Kevin and his girlfriend immediately took the money and headed to the nearest riverboat casino for a weekend of gambling and entertainment.

• A) This is an example of adverse selection since banks have difficulty selecting their customers.
• B) This is a typical example of the Condorcet Paradox.
• C) From the given information, Kevin is the principal and his girlfriend is the agent.
• D) From the given information, Hi Interest Bank is the principal and Kevin is the agent.

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Definitions:

Ideal Cost-Of-Living Index

A theoretical measure that tracks the changes in the amount required to maintain a constant standard of living over a period.

Ideal Cost-Of-Living Index

A theoretical measure representing the change in the amount of money needed to maintain a certain standard of living.

Utility

A measure of satisfaction or happiness that a consumer receives from consuming goods and services.

Current Prices

Prices at which goods and services are sold in the market at the present time, not adjusted for inflation or other factors that affect purchasing power.