Which of the Following Statements Is True

question 63

Multiple Choice

Which of the following statements is true?

• A)A market imperfection exists if the expected borrowing rate from the lender's perspective differs from the expected borrowing rate from the borrower's perspective.
• B)A market imperfection exists if the promised savings rate is higher than the promised borrowing rate.
• C)A market imperfection exists if the promised borrowing rate is higher than the expected borrowing rate.
• D)All of the above are market imperfections.

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Definitions:

Policy Weakness

A flaw or deficiency in a policy that prevents it from achieving its intended outcomes or makes it inefficient.

Bargaining Costs

The expenses in time, resources, or money that are incurred during the process of negotiating agreements between parties.

Coase Theorem

A principle stating that, in the presence of clear property rights and negligible transaction costs, parties can negotiate to correct externalities and allocate resources efficiently.

Efficient Outcome

A situation in which resources are allocated in the most effective manner, maximizing total benefit and minimizing waste.