Which of the following statements is false?
A) Asymmetric information can exist both before and after a transaction.
B) Moral hazard occurs when one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party.
C) Adverse selection has the potential to eliminate some markets.
D) none of the above
D
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A decrease in the discount rate will
A) have an unclear effect on the money supply. B) decrease the money supply. C) increase the money supply. D) not affect the money supply.
Zero lower bound refers to the fact that
A) the government budget deficit must be zero in the long run. B) the lowest possible level of the current account deficit is zero in the long run. C) the inflation rate can never decline below zero. D) nominal interest rates cannot fall below zero.