Which of the following is not true of adverse selection?
a. It would not exist in a world with perfect information.
b. It arises because borrowers typically know more about themselves than lenders.
c. It describes a lenders problem of distinguishing the good-risk applicants from the bad-risk applicants.
d. It takes a lender’s problem in monitoring borrowers’ use of funds.
The correct answer is d. It takes a lender’s problem in monitoring borrowers’ use