(a) Explain how the problems arising from adverse selection affect the bond and stock markets. Why is this bad for the economy? What is one solution to the problem of adverse selection? Hint: You can use example of "Market for Lemons" for the similar logic. (b) List several strategies of how government can ensure stable and smooth working of banks? (a) Explain how the problems arising from adverse selection affect the bond and stock markets. Why is this bad for the economy? What is one solution to the problem of adverse selection? Hint: You can use example of "Market for Lemons" for the similar logic. (b) List several strategies of how government can ensure stable and smooth working of banks