Because Information Is Scarce

question 71

Multiple Choice

Because information is scarce

• A)helps explain why equity contracts are used so much more frequently to raise capital than are debt contracts.
• B)monitoring managers gives rise to costly state verification.
• C)government regulations,such as standard accounting principles,have no impact on problems such as moral hazard.
• D)developing nations do not rely heavily on banks for business financing.

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Definitions:

Horney

Karen Horney, a psychoanalyst known for her theories on neurosis, personality, and the importance of social relationships in mental health.

Erikson

Refers to Erik Erikson, a psychologist known for his theory on the stages of psychosocial development across the lifespan.

Freud

Freud, a neurologist from Austria, developed the psychoanalytic method, which involves treating mental illnesses through dialogue between an analyst and the person seeking help.

Anal Stage

In Freudian psychology, the second stage of psychosexual development, occurring between about 18 months and three years of age, during which children find pleasure in controlling bowel movements.