Because of the Presence of Asymmetric Information Problems in Credit

question 57

Multiple Choice

Because of the presence of asymmetric information problems in credit markets,an expansionary monetary policy causes a ________ in net worth,which ________ the adverse selection problem,thereby ________ increased lending to finance investment spending.

• A)decline;increases;encouraging
• B)rise;increases;discouraging
• C)rise;reduces;encouraging
• D)decline;reduces;discouraging

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Definitions:

Revenue Functions

Mathematical models that calculate the total revenue generated by selling a certain number of products or services.

Maximum Profit

The highest potential financial gain that can be achieved from an investment or business venture.

Candlestick Chart

A chart, like a stock chart, but with a top line that indicates the high price, and a low line that indicates the low price for a given period; the rectangular region, known as the real body, is displayed in two different colors; the green candlestick indicates that the closing price is greater than the opening price and the red candlestick indicates the closing price is less than the opening price.

Real Body

In candlestick charting in finance, the wide part of a candle, showing the difference between the opening and closing prices.