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Adverse Selection and Currency Mediums

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60/10. Give an example of how the problem of adverse selection might prevent you from getting financing for something you want to do. Can you think of a way of overcoming the problem?

60/12. Why is it that a country's postage stamps are not as good a medium of exchange as its paper currency?

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The solution discusses adverse selection and currency mediums.

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1. In credit card companies, those who pay on time are usually penalized for the losses incurred from people who do not pay on time. Therefore, when a person with even good credit applies for a loan for ...

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