Most Individuals Save at Banks Rather Than Lend Directly Because

question 12

Multiple Choice

Most individuals save at banks rather than lend directly because:

• A) the bank creates information asymmetry.
• B) moral hazard exists only when individuals make loans directly to borrowers, it does not occur when banks issue loans.
• C) banks can reduce the cost of information asymmetry.
• D) information asymmetry is a problem for individuals but not for banks.

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Definitions:

Anxiety Hierarchy

A ranked list of stimuli that evoke anxiety, used in therapies to systematically desensitize individuals to their fears.

Instrumental Conditioning

A learning process in which behavior is modified through the use of rewards or punishments.

Footshock Group

A term used in behavioral experiments where a group of subjects receives mild electric shocks as part of the study conditions.

Tasty Water

A term possibly referring to water that is appealing or pleasant in taste, potentially due to added flavors or natural qualities.