The Presence of Transactions Costs and Information Costs

question 45

Multiple Choice

The presence of transactions costs and information costs

• A)lowers the cost of funds to borrowers.
• B)raises the cost of funds to borrowers.
• C)raises the expected return to lenders.
• D)increases the efficiency of the financial system.

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Definitions:

Conforming Goods

Goods that meet the specifications and standards outlined in a sales contract.

Legal Tender

Money that must be accepted if offered in payment of a debt; the legally recognized form of payment within a given jurisdiction.

Incidental Damages

Damages awarded for losses indirectly, but closely, attributed to a breach to cover any expenses paid out by an innocent party to prevent further loss.

Breach

A violation or infringement of a law, obligation, standard, or contract.