Transaction and information costs
A) benefit borrowers at the expense of savers.
B) benefit savers at the expense of borrowers.
C) transaction costs hurt savers while information costs hurt borrowers.
D) create profit opportunities for those who can reduce these costs.
D
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The basic idea behind moral hazard is that ________
A) some economic transactions impose an additional cost on society B) some economic transactions give rise to an additional benefit to society C) people tend to take more risks if they do not have to bear the costs of their behavior D) people do not reveal their true preference for goods that are non-excludable in consumption
The table below represents Freedonia's macroeconomic data for Year 1 and Year 2. Suppose that the production function is given by Y = AK0.25N0.75. Between Year 1 and Year 2, total factor productivity of Freedonia's economy increased by
A) -1.5%. B) 5.0%. C) 5.5%. D) 12.7%.