Suppose you hear of a great deal on a used car and wonder, Why is the price so low? This might be an instance of ________.
A) tyranny of collateral
B) adverse selection
C) the free rider problem
D) moral hazard
Question 2
The real interest rate ________.
A) is the cost of borrowing adjusted for inflation
B) keeps the market for saving and investment in equilibrium
C) describes the real benefit of saving
D) all of the above
E) none of the above
