Question1. Describe the meaning of asymmetric information, adverse selection and moral hazard and their implications on the responsibility of commercial banks in financial intermediation process.
Question2. How do commercial banks address the problems of asymmetric information?
Question3. Contrast the major theories of demand for money.
Question4. Identify a money demand function for small island economy like Mauritius.
Question5. Clearly explain the objectives and functions of Central bank in small open economy like Mauritius.
Question6. What are the aims and instruments of the monetary policy?
Question7. “With financial liberalisation, there is requiring shifting from direct instruments to indirect market–based techniques of monetary policy implementation”. Discuss.