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3 years ago

Suppose Cho comes into a large sum of money and decides to lend it out to

Business

1 answer:

Ierofanga [76]3 years ago

8 0

Answer:

C. Adverse selection.

Explanation:

Adverse selection occurs when the participants in a economic transaction do not have the same amount of information about each other: either the buyer has more information than the seller, or the seller has more information than the buyer.

In the question, we have an example of adverse selection because Cho does not have enough information about the buyers (the borrowers), and she does not have a good way to obtain that information.

For that reason, she decides to give the money to the bank, an institution with much more capacity and information about the borrowers. Like this, she is solving the problem of adverse selection.

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If there is a recessionary gap in the short run, the Federal Reserve can eliminate the gap in the short run by undertaking a po

NeTakaya

Answer:

D. harms the society by interfering with the economy's natural process.

Explanation:

In order to get out of recession, the fed should reduce the tax rates, which would in return lead to higher disposable income of the consumers, and then there will be an increase in the demand.

On the other hand the sale of bonds would even further increase the recession, as there will be more cash crunch in the economy. A decrease in reserve ratio will be a long time taking solution, so it would not provide an immediate solution.

MCQ

But, if the fed interferes with the short run equilibrium in the hope of giving short run benefits, it will hamper the economy's natural process to attain a new equilibrium as discussed in the paragraph above. Hence, option D is the correct answer

Option A and C are incorrect, because, employment is not much affected with lowering of income tax. On, the other hand, inflation levels rise, when there is a cut in income tax, as it gives more currency in the economy, hence even C is incorrect.

6 0

3 years ago

A firm has a long-term debt-equity ratio of .4. Shareholders’ equity is $1 million. Current assets are $200,000, and the current

Nuetrik [128]

Answer:

Total debt ratio is 33.33%

Explanation:

A long term debt to equity ratio of 0.4 tells that the value of long term debt is 0.4 or 40% of the value of the equity. If the value of the equity is $1 million, the value of long term debt is,

Long term debt = 0.4 * 1000000 = $400000

A current ratio is calculated by dividing the current assets by the current liabilities. It tells how many current assets are available to satisfy $1 of current liabilities. A current ratio of 2 means that for every $1 of current liability, $2 of current assets are available. Thus, current liabilities are half of current assets. If the value of current assets is $200000, the value of current liabilities is,

Current liabilities = 200000 * 1/2 = $100000

Total liabilities = 400000 + 100000 = $500000

A debt ratio is calculated by dividing the value of total debt or total liabilities by the value of total assets.

Total assets = total liabilities + total equity

Total assets = 500000 + 1000000

Total assets = $1500000 or $1.5 million

Total debt ratio = 500000 / 1500000

Total debt ratio = 1/3 or 0.3333 or 33.33%

5 0

3 years ago

The production facility for a space shuttle would probably be organized according to a ________ layout.

mylen [45]

Answer:

fixed-position

Explanation:

7 0

2 years ago

Voluntary exchange refers to an act of trading between individuals that makes both parties to the trade subjectively better off.

Bond [772]

The answer would be A. True

6 0

3 years ago

What is debit? And what is credit?

Shtirlitz [24]

What exactly are debits and credits? In a nutshell, debits (dr) record all money that flows into an account, while credits (cr) record all money that flows out of an account.

5 0

2 years ago