The difference between moral hazard and adverse selection is
a. moral hazard has to do with unobservable characteristics of individuals
b. moral hazard has to do with unobservable actions of individuals
c. adverse selection is when individuals change their behaviors because of a contract
d. adverse selection is when you choose the wrong answer on a test
b
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Marginal cost is the cost
A) that your activity imposes on someone else. B) that arises from an increase in an activity. C) of an activity that exceeds its benefit. D) that arises from the secondary effects of an activity.
What is meant by the term "credit easing"?
A) It is a strategy which involves the extension of central bank lending to influence more broadly the proper functioning of credit markets and to improve liquidity. B) It is a strategy which involves keeping interest rates very low by providing substantial reserves for as long as is necessary to avoid deflation and encourage spending. C) It is a strategy which involves lowering the required reserve ratio and lowering the federal funds rate to encourage banks to increase loan creation. D) It is a strategy which involves allowing interest rates to rise slowly by providing substantial reserves for as long as is necessary to avoid inflation.