<u>Solution and Explanation:</u>
<u>Moral Hazard </u>– It is a situation when a firm or an individual modify their behaviour once the person gets what one was desired to achieve; example, insurance, funding, etc.
<u>Adverse selection </u>- The firm does not information on the consumer, and, sells the product at lower price assessing a lower risk when more information would have made the seller ask for a higher price
a) Moral Hazard
The country changes its project plan after the World Bank extends the loan; if the World Bank has put in conditions that it be used only for a canal, then the loan cannot be used
Answer:
a short-run equilibrium but not a long-run equilibrium.
Explanation:
The long run aggregate supply and aggregate demand when intersect they determine the economy level of equilibrium. This will determine real level of GDP and prices in the long run. The short run supply curve is upward sloping. It determines the quantity of the output that will be produced at each level of price in the short run.
All economic systems must answer the 3 basic questions:
1. What goods and services will be produced
2. How will the goods and services be produced?
3. Who will consume the goods and services?
Answer:
The correct answer to the following question is option E) 9.06% .
Explanation:
Here the cost of equity given is - 11.8%
Pre tax cost of debt- 6.9%
Tax rate- 35%
So the after tax cost of debt - 6.9% x 65%
= 4.485%
The debt to equity ratio - .6
So the weight of debt - .6 / ( 1 + .06 )
= .375
Weight of equity - 1 / ( 1 + .06 )
= .625
Weighted average cost of capital =
Debts cost x weight of debt + Equity cost x weight of equity
= 4.485 x .375 + 11.8 x .625
= 1.681875 + 7.735
= 9.06%
Answer: get a lil side job a save until you have enough
Explanation:
