If the Market Interest Rate Is 5% and a Bank

question 13

Multiple Choice

If the market interest rate is 5% and a bank advertises loans at 12%,the bank will receive

• A) no applications.
• B) applications from mostly low-risk borrowers.
• C) applications from mostly high-risk borrowers.
• D) a moral hazard.

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Definitions:

Dredging Lake

The process of removing sediments and debris from the bottom of lakes or water bodies to improve their health or navigability.

Cultural Eutrophication

Accelerated nutrient enrichment of water bodies caused by human activities, leading to excessive algal blooms and aquatic ecosystem degradation.

Lakes

Large bodies of water surrounded by land, not directly connected to the sea, varying in size, depth, and ecosystem.

Cultural Eutrophication

The process by which a water body becomes overly enriched with minerals and nutrients (mainly from runoff) leading to an explosion in algae growth, which can deplete oxygen levels in water bodies.