Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 16, Problem 8RQ
What are some ways that someone looking for a loan might reassure a bank that is faced with imperfect information about whether the borrower will repay the loan?
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Students have asked these similar questions
what is a real life example of a commercial bank
Why do loan sharks worry less about moral hazard in connection with their borrowers than some other lenders do?
Banks are naturally unstable because they have ______________ liabilities, but __________________ assets.
Group of answer choices
a. long term; short term
b. high; low
c. short term; long term
d. low; high
Chapter 16 Solutions
Principles of Economics 2e
Ch. 16 - For each of the following purchases, say whether...Ch. 16 - Why is there asymmetric information in the labor...Ch. 16 - Why is it difficult to measure health outcomes?Ch. 16 - Why might it be difficult for a buyer and seller...Ch. 16 - What do economists (and used-car dealers) mean by...Ch. 16 - What are some ways a seller of goods might...Ch. 16 - What are some ways a seller of labor (that is,...Ch. 16 - What are some ways that someone looking for a loan...Ch. 16 - What is an insurance premium?Ch. 16 - In an insurance system, would you expect each...
Ch. 16 - What is an actuarially fair insurance policy?Ch. 16 - What is the problem of moral hazard?Ch. 16 - How can moral hazard lead to more costly insurance...Ch. 16 - Define deductibles, copayments, and coinsurance.Ch. 16 - How can deductibles, copayments, and coinsurance...Ch. 16 - What is the key difference between a...Ch. 16 - How might adverse selection make it difficult for...Ch. 16 - What are some of the metrics economists use to...Ch. 16 - You are on the board of directors of a private...Ch. 16 - A website offers a place for people to buy and...Ch. 16 - How do you think the problem of moral hazard might...Ch. 16 - To what sorts of customers would an insurance...Ch. 16 - Using Exercise 16.20, sketch the effects in parts...
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Similar questions
- What short and long term effects did deregulation of the banking industry from the 1980s through the early 2000s have on bank consumer lending programs?arrow_forwardHow does Adverse Selection potentially affect a Bank and how can a bank overcome (some of) the risk of Adverse Selection?arrow_forwardMany people choose to be unbanked due to a lack of trust in traditional banking services. Why do you think some individuals place more trust in alternative banking services?arrow_forward
- Depository institutions, nondepository institutions, and commercial banks Group of answer choices? are all financial intermediaries. offer the same kinds of financial services to the public. have the same types of liabilities and different types of assets. are different because only depository institutions are profit-driven.arrow_forwardWhich of these is an example of asymmetric information in banking? a. Borrowers and lenders have different expectations about financial markets. b. Borrowers' goals are short-term while lenders' goals are long-term. c. Lenders know more about the capacity of borrowers to repay loans than borrowers. d. Borrowers know more about their capacity to repay loans than lenders.arrow_forwardRoy does not trust banks and has been keeping his earnings in coffee cans in a freezer. His friend Julia convinces him that banks are safe, and Roy finally opens a chequing account. When he deposits his money into the account that transaction will directly increase the money . FALSE TRUEarrow_forward
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