10-27Prior to the Secondary Mortgage Market It Was Difficult for Thrifts

question 38

Multiple Choice

10-27.Prior to the secondary mortgage market it was difficult for thrifts to sell mortgages because:

• A) their mortgage assets were not homogeneous
• B) potential buyers were concerned with default risk
• C) both a and b
• D) none of the above

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Definitions:

Pareto Efficient

An allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.

Pure Exchange Economy

An economic model assuming no production, where agents trade existing goods and services, focusing on the allocation and distribution based on preferences.

Consumption Bundles

A combination of various goods and services chosen by a consumer based on their budget and the utility derived from the items.

Pareto Optimal

An alternative term for Pareto Efficient, describing a state where making any individual or preference criterion better off without making at least one individual or criterion worse off is impossible.