A likely consequence of debt default is _____ .
a. a decrease in the federal cost of borrowing.
b. an increase in unemployment due to growing uncertainty.
c. a sudden decline in the market interest rates.
d. an increase in the credit flows in an economy.
b. an increase in unemployment due to growing uncertainty.
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A problem for equity contracts is a particular type of ________ called the ________ problem
A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider D) moral hazard; free-rider
Suppliers will be willing to supply a product only if
A) the price received is less than the additional cost of producing the product. B) the price received is at least equal to the additional cost of producing the product. C) the price is higher than the average cost of producing the product. D) the price received is at least double the additional cost of producing the product.