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Difference between moral hazard and adverse selection

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Reference no: EM132729894

Question 01

a) Brietly explain why a country without a robust financial system might struggle to achieve high rates of economic growth?

b) What is the difference between moral hazard and adverse selection? Explain the "lemons problem." How does the lemons problem lead many firms to borrow trom banks rather than from individual investors?

c) Why was the Securities and Exchange Commission (SEC) founded? What effect has the SEC had on the level of asymmetric information in the U.S. financial system?

Reference no: EM132729894

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