When bank loan officers screen loan applicants to eliminate potentially bad risks, they are attempting to mitigate the problem of

Banks face liquidity risk because

A) they can have difficulty meeting their depositor's demands to withdraw money. B) they are unable to borrow from the Federal Reserve. C) households and businesses may seek to borrow a large amount of funds in a short period of time. D) governments tend to run high budget deficits.

Which of the following would tell us that resources are not flowing to their highest valued uses?

A) short-run economic profits B) short-run economic losses C) song-run economic profits D) Some firms are just breaking even.