Because of the problems of adverse selection and moral hazard, it has been suggested that the World Bank and International Monetary Fund
A. not make loans to risky nations because there is a high demand for funds from safer nations.
B. impose tougher preconditions on borrowers.
C. make loans to the riskiest nations so that private investors will not be tempted to take a risk.
D. loan only to countries that have free elections.
Answer: B
You might also like to view...
If output is increased beyond the point where total profit is maximized,
a. marginal profit will be zero. b. marginal profit will be negative. c. marginal profit will be positive. d. MR > MC.
Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is
a. inelastic, and total revenue will increase. b. elastic, and total revenue will increase. c. inelastic, and total revenue will decrease. d. elastic, and total revenue will decrease.