Financial Intermediaries Reduce the Problems in Lending Associated with Information

question 60

Multiple Choice

Financial intermediaries reduce the problems in lending associated with information asymmetries by all of the following except:

• A) collecting and processing standardized information.
• B) screening applicants to be sure they are creditworthy.
• C) monitoring loan recipients to be sure the funds are used properly.
• D) charging interest rates high enough to discourage undesirable borrowers.

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Definitions:

Spontaneous Recovery

The return of a conditioned response that had been previously eliminated, following a timeframe where there was no contact with the conditioned stimulus.

CS-US Trials

In conditioning, trials where a conditioned stimulus (CS) is presented before an unconditioned stimulus (US) to create an association.

Extinction

In behavioral psychology, the process by which a conditioned response decreases in frequency and eventually disappears.

Second-order Conditioning

A conditioning process where a neutral stimulus becomes a conditioned stimulus through association with an already conditioned stimulus.