Because borrowers, once they have a loan, are more likely to invest in high-risk investment projects, banks face the
A) adverse selection problem.
B) lemon problem.
C) adverse credit risk problem.
D) moral hazard problem.
D
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What is a multilateral exchange rate?
a. It is an exchange rate that is measured by using a number of different techniques. b. It is an exchange rate that calculates the overall movement of the rate against more than just one other currency. c. It is an exchange rate that is measured once every 10 years. d. It is a rate that is set by the IMF for many different nations.
For many years after the Great Depression, economists believed a central bank policy of increasing bank reserves in response to a recession would be
A) largely ineffective. B) the opposite of what the circumstances required. C) useless unless it also raised interest rates. D) useless unless it was accompanied by declining prices.