Which of the Following Is an Example of Informational Asymmetry

question 47

Multiple Choice

Which of the following is an example of informational asymmetry?

• A)A seller of a house knows more about its true condition than does a potential buyer.
• B)A salesperson knows more about her efforts than does her manager.
• C)A child knows more about how much time he spent playing video games while he was alone in his bedroom than do his parents.
• D)All of the above are correct.

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Definitions:

Recession

A short-term economic slump characterized by a reduction in business and industrial activities, usually signified by a GDP decrease over two back-to-back quarters.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate representation of an economy's size and how it's growing over time.

Business Quarters

Divisions of a fiscal year into four three-month periods, used by companies to report financial results and forecast future performance.

Unemployment Rate

The quantity of jobless individuals in the labor force who are vigorously searching for employment.