Question: What is the lemons problem? Explain how the lemons problem can explain the failure of financial markets. (10 points) This question is about regulations

What is the "lemons problem"? Explain how the "lemons problem" can explain

What is the "lemons problem"? Explain how the "lemons problem" can explain the failure of financial markets. (10 points) This question is about regulations in banking industry: a) What is the asymmetric information problem and how does it contribute to our understanding of the structure of bank regulation? b) Why does the safety net created by deposit insurance increase the adverse selection and moral hazard problems in banking?

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