Question 1a what is adverse selection how does it harm the

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Question 1

a. What is adverse selection? How does it harm the economic process?

b. What is moral hazard? What are its consequences?

c. Confronted with adverse selection and moral hazard, which would you say is the greater of the two evils - from the point of view of damage inflicted, and from the point of view of regulatory measures that can be taken?

Question 2

a. What is the principal - agent problem?

b. Suggest at least 2 ways in which this issue may be dealt with.

Question 3

a. What were the provisions of the Glass-Steagall Act?

b. Why was it enacted? Why was it repealed?

c. What were the provisions of the Gramm-Leach-Bliley Act?

d. How did it come into being? What were (are) its consequences?

Reference no: EM13372448

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