Chapter 14 Flashcards
1
Q
Financial Market
A
Is where people trade future claims on funds or goods.
2
Q
Information asymmetry
A
When one participant in a transaction knows more that another participant.
3
Q
Adverse Selection
A
When buyers and sellers have different information about the quality of the good or the riskiness of a situation.
4
Q
Moral Hazard
A
Tendency for people to behave in riskier ways or to renege on contracts when they do not face the full consequences of their actions.
5
Q
Market for Loanable Funds
A
The market in which those who want to save supply funds and those who want to borrow to invest demand funds.
6
Q
A
