1. How is lending money to others complicated. by adverse selection and moral hazard?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Answer question 1

Choose one of the
following to discuss:
1. How is lending money
to others complicated
by adverse selection
and moral hazard?
2. How does the
fractional reserve ratio
affect the money
multiplier (show
formula)? How does the
money
multiplier help determine
the total expansion in
money supply following
a new deposit of $1
million by the Federal
Reserve into the
economy?
Transcribed Image Text:Choose one of the following to discuss: 1. How is lending money to others complicated by adverse selection and moral hazard? 2. How does the fractional reserve ratio affect the money multiplier (show formula)? How does the money multiplier help determine the total expansion in money supply following a new deposit of $1 million by the Federal Reserve into the economy?
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