E. Only A and B of the above. For financial markets, the concept of adverse selection refers to A A. the negative effects on the quality of the pool of loan applicants when banks try to use a single interest rate to cover expected default costs. B. the high rejection rates faced by loan applicants. C. the tendency of borrowers to undertake risky loans. D. the incentive of borrowers to shift to more risky loan projects after their loan contracts are signed if monitoring is imperfect.
Economists define income as A. The market value of all assets owned at a point in time.
B. Anything that is generally accepted in payment for goods and services and for the repayment of debt. C. Anything that can be used to store value over time. The flow of value accrued over some specified period of time. E. None of the above. The change from a barter to a monetary economy increases efficiency by reducing costs for those who wish to specialize in production.