Janie convinces her uncle Seymour that she is on the Dean's list each semester and asks him to lend her $5,000 to help pay for her college tuition for the upcoming year, assuring him that she will be able to pay him back as soon as she graduates and

gets a job. In reality, Janie has flunked out of college, has spent all her savings on food for her 40 ferrets, and wants to use the money to bail her boyfriend out of jail. Not being honest with her uncle when asking for the loan is an example of ________, and spending the borrowed money to pay her boyfriend's bail is an example of ________. A) moral hazard; asymmetric information
B) moral hazard; the principal-agent problem
C) adverse selection; moral hazard
D) the principal-agent problem; adverse selection

C