The nominal interest rate minus the expected rate of inflation defines the real interest rate. is a better measure of the incentives to borrow and lend than the nominal interest rate. is amore accurate indicator of the tightness of credit market conditions than the nominal interest rate. all of the above. only A and B of the above A is the type of loan has the Mine cash flow payment every year throughout the life of the loan. discount loan simple loan fixed-payment loan interest-free loan Because information is scarce, equity contracts are used much more frequently to raise capital than are debt contracts monitoring managers gives rise to costly Mate verification. government regulations, such as standard accounting principles, can help reduce moral hazard. all of the above are true. only B and C of the above are true. If borrowers take on big risks after obtaining a loan, then lenders face the problem of free-riding. adverse selection moral hazard. costly state verification. The problem created by asymmetric information before the transaction occurs is called-, while the problem created after the transaction occurs is called- adverse selection; moral hazard moral hazard; adverse selection costly state verification; free-riding free riding: costly slate verification the problem occurs when people who do not pay for information take advantage of the information that other people have paid for. free-rider moral hazard adverse selection lemons