One Financial Intermediary in Our Financial Structure That Helps to Reduce

question 94

Multiple Choice

One financial intermediary in our financial structure that helps to reduce the moral hazard arising from the principal-agent problem is the

• A) venture capital firm.
• B) money market mutual fund.
• C) pawn broker.
• D) savings and loan association.

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Definitions:

Property Rights

Legal rights that delineate the ownership and use of property, including rights to use, sell, rent, mortgage, transfer, and destroy the property.

Marginal Costs

The additional cost incurred by producing one more unit of a product or service, crucial for decision-making in economics and business.

Property Rights

The legal rights to possess, use, and dispose of assets, property rights are foundational to free market economies and influence resource allocation and investment.

Marginal Benefits

The additional satisfaction or utility gained from consuming or using one more unit of a good or service.