One problem that became clear during the financial crisis of 20072009 was that lending standards allowed some

Question:

One problem that became clear during the financial crisis of 2007–2009 was that lending standards allowed some borrowers to falsify information about their income and creditworthiness.
a. Explain how this problem of falsifying information relates to asymmetric information.
b. What would you expect to happen to lending standards in the wake of the financial crisis, and how might this affect consumers’ ability to allocate spending over time?