Adverse selection can occur when
A) all persons involved in a transaction have full information.
B) one person has information not available to others.
C) post-agreement incentives result in workers shirking.
D) nobody has any information about a particular product.
B
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Pick the decision maker from the list below
A) The head of Al Qaeda B) The Taliban C) The Government of Afghanistan D) The Middle East E) All of the above are decision makers.
Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate?
A) Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning. B) Pegging allows the country more flexibility in conducting monetary policy. C) Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency. D) Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.