To Help Offset the Costs from Loan Defaults, the First

question 70

Multiple Choice

To help offset the costs from loan defaults, the First National Bank of Gotham decides to increase the interest rate it charges on its business loans. As a result of this increase in the interest rate, the creditworthiness of Gotham's loan applicants is likely to

• A)improve.
• B)deteriorate.
• C)be unchanged.
• D)be unchanged, unless the economy enters a recession at the same time as the interest rate is increased.