Tools to Help Solve the Adverse Selection Problem in Financial

question 10

Multiple Choice

Tools to help solve the adverse selection problem in financial markets include all of the following EXCEPT

• A)diversification.
• B)government regulations to increase information.
• C)the use of financial intermediaries.
• D)the private production and sale of information.

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Definitions:

Autocracy

A form of government where power is concentrated in the hands of a single individual or a small group, without significant input from citizens.

Monarchy

A form of government in which a single person, the monarch, rules until death or abdication, and the position is usually inherited.

Communist

Pertaining to a political and economic system aiming for a classless society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Socialist

Pertaining to a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.