A borrower who takes out a loan usually has better information about the potential returns and risks of the investment projects he plans to undertake than the lender. This inequality of information is called
Mid-Semester Japanese Economy

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レジナ カーラ ネオラ セティアディ ニオ
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1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
asymmetric information
Adverse selection
Noncollateralized Risk
Moral Hazard
Answer explanation
The situation described is an example of asymmetric information, where the borrower has more knowledge about the investment's risks and returns than the lender, leading to potential issues in the loan agreement.
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Money is
always based on a precious metal like gold or silver
a flow of earnings per unit of time
anything that is generally accepted in payment for goods and services or in the repayment of debt
a total collection of pieces of property that are a store of value
Answer explanation
The correct answer defines money as anything generally accepted for goods, services, or debt repayment. This broad definition encompasses various forms of money, unlike the other options that are too restrictive or inaccurate.
3.
MULTIPLE SELECT QUESTION
1 min • 1 pt
Choose all correct statements
Money in a broad sense is mostly a kind of digital currency
A central bank will be able to circulate banknotes just by starting the issuance of banknotes with automatic establishment of general acceptability of banknotes
Looking bank at human history, a currency circulates without a central bank
Yen (or other currencies) will still function as a unit of account in a totally cashless economy
Answer explanation
The correct statements highlight that money is increasingly digital, historical currencies circulated without central banks, and traditional currencies like Yen can still serve as units of account in a cashless economy.
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is a seigniorage?
Fess charged by financial institutions for withdrawing banknotes
Income from financial assets held in exchange for the issue of banknotes
Central banks do not profit from currency issuance
The difference between the face value of a banknote and the cost of printing it
Answer explanation
Seigniorage refers to the income generated from financial assets in exchange for issuing banknotes. This includes the profit made from the difference between the face value of the currency and its production cost.
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is the control variable for a central bank in implementing monetary policy in normal time?
money stock
long-term government bond rate
monetary base
policy interest rate
Answer explanation
The control variable for a central bank in normal monetary policy is the policy interest rate. It influences borrowing costs and overall economic activity, making it a key tool for managing monetary conditions.
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following increases when the economy is in the contractionary phase?
Economic growth rate
Inflation rate
Household Income
Unemployment rate
Answer explanation
During the contractionary phase of the economy, businesses reduce production, leading to layoffs and higher unemployment. Thus, the unemployment rate increases, while economic growth, inflation, and household income typically decrease.
7.
MULTIPLE SELECT QUESTION
1 min • 1 pt
Which of the following is consistent with a 5% increase in nominal GDP? Select all the correct choices
Real GDP growth rate= 4%/GDP deflator inflation rate= -1%
Real GDP growth rate= 8%/GDP deflator inflation rate= -3%
Real GDP growth rate= 2%/GDP deflator inflation rate= 3%
Real GDP growth rate= -2%/GDP deflator inflation rate= 7%
Real GDP growth rate= -8%/GDP deflator inflation rate= 3%
Answer explanation
A 5% increase in nominal GDP can occur with a combination of real GDP growth and inflation. The correct choices show scenarios where the sum of real GDP growth and inflation aligns with a 5% nominal increase.
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