Of the Following Methods That Banks Might Use to Reduce

question 85

Multiple Choice

Of the following methods that banks might use to reduce moral hazard problems,the one not legally permitted in the United States is the

• A)requirement that firms keep compensating balances at the banks from which they obtain their loans.
• B)requirement that firms place on their board of directors an officer from the bank.
• C)inclusion of restrictive covenants in loan contracts.
• D)requirement that individuals provide detailed credit histories to bank loan officers.

Understand the characteristics of perfectly competitive markets.

Identify the relationship between market demand and individual firm's profits in a perfectly competitive market.

Comprehend the concept of marginal revenue and how it relates to a firm's pricing and output decisions.

Understand the significance of the marginal cost in profit maximization for firms in perfectly competitive markets.

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Definitions:

Security

The condition of being protected from or not exposed to danger or risk; also refers to measures taken for safety.

Motivation Factors

Elements that influence an individual's level of motivation, including intrinsic rewards, recognition, and personal goals.

Herzberg's Two-Factor Theory

A motivational theory that divides factors in the workplace into two categories: hygiene factors, which if inadequate cause dissatisfaction, and motivators, which can lead to satisfaction.

Expectancy Theory

A motivational theory suggesting that people are motivated to perform behaviors if they believe that such behaviors will lead to desired outcomes.