4. The theory of PPP suggests that if one countryʹs price level rises relative to anotherʹs, its currency should

The
presence of ________ in financial markets leads to adverse selection
and moral hazard  


problems
that interfere with the efficient functioning of financial markets.

The
current structure of financial markets can be best understood as the
result of attempts by financial market participants to

)
) If you default on your auto loan, your car will be repossessed
because it has been pledged as ________ for the loan.

One
purpose of regulation of financial markets is to

With
regard to external sources of financing for nonfinancial businesses
in the United States, which
of the following are accurate statements?

Of
the following sources of external finance for American nonfinancial
businesses, the least important is

A
situation when an asset price differs from its fundamental value is  


A)

According
to the efficient markets hypothesis, purchasing the reports of
financial analysts

________
occurs when market participants observe returns on a security that
are larger than  


what
is justified by the characteristics of that security and take action
to quickly eliminate the  


unexploited
profit opportunity.

Rational
expectations forecast errors will on average be ________ and
therefore ________ be  


predicted
ahead of time.