Because of the problems of adverse selection and moral hazard, it has been suggested that the World Bank and International Monetary Fund
A) make loans to the riskiest nations so that private investors will not be tempted to take a risk.
B) impose tougher preconditions on borrowers.
C) not make loans to risky nations because there is a high demand for funds from safer nations.
D) loan only to countries that have free elections.
B
You might also like to view...
If both firms in a duopoly cheat on a collusive agreement, the price ________ and both firms are ________
A) falls; better off B) rises; worse off C) falls; worse off D) rises; better off
"The Great Depression was caused by the 1929 stock market crash.". Which of the following is an indication that this statement is false?
a. The stock market had regained most of its losses from the October 1929 crash by April 1930. b. The recessionary conditions actually began in the mid-1920s before the stock market crash. c. The Great Depression was a result of government failure to intervene in market activity. d. Economic theory indicates that a reduction in stock prices would reduce the consumer price index and thereby stimulate output and employment.