The Most Direct and Important Consequence of an Increase in Asymmetric

question 71

Multiple Choice

The most direct and important consequence of an increase in asymmetric information problems is ________.

• A)a decrease in the probability of loan repayment
• B)inability to assess the probability of loan repayment
• C)unwillingness of borrowers to accept the market rate of interest
• D)inability of creditors to acquire enough funds to meet borrowers' demand

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Definitions:

Keynes

An alternate perspective on John Maynard Keynes, highlighting him as a seminal figure whose theories on fiscal policy, investment, and demand management have influence beyond traditional economics.

Cyclical Unemployment

Refers to the unemployment that occurs due to fluctuations in the economy or the business cycle, such as during a recession.

Budget Deficit

A budget deficit occurs when a government’s expenditures exceed its revenues within a given fiscal period, leading to the need for borrowing or using saved reserves.

Keynesian Model

An economic theory advocating for government intervention in the economy through fiscal policies to manage demand and address unemployment.