If Banks Face a Problem in Loan Markets When Bad

question 11

Multiple Choice

If banks face a problem in loan markets when bad credit risks are the ones most likely to seek bank loans,it is described as

• A)moral hazard.
• B)moral suasion.
• C)adverse selection.
• D)fraud.

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Definitions:

Express Authority

The clear, direct authority granted by a principal to an agent, specifically outlined in their agreement.

Actual Authority

An agent’s ability to affect the principal’s legal relations. Consent must be communicated to the agent.

Authorized Sale

A sale that is officially approved or permitted by the relevant authority or governing body, often following designated protocols or rules.

General Agents

Individuals authorized to perform a broad range of actions on behalf of another person or entity.