Question

Generally, when there is asymmetric information:

A. a lender will only lend to the government.
B. a lender will only lend to well-known borrowers.
C. practical solutions are devised to allow lending to take place.
D. a lender will cease all lending activities.

Answer 1

The correct answer is C

Step-by-step explanation:

Asymmetric information is the kind of information which helps in explaining or describing the problems that are related to the adverse selection and the moral hazard pose for the financial system.

So, usually when the asymmetric information is used, then the practical solutions to the problem are devised and it allows lending to take place or to happen.