Which of the Following Situation Is Similar to the Externality

question 30

Multiple Choice

Which of the following situation is similar to the externality effect?

• A) Exercising an adverse material change in conditions clause as a last resort, thereby cancelling or repricing a loan commitment.
• B) Increase in the cost of funds above normal levels while many FIs scramble for funds to meet their commitments to customers during a credit crunch.
• C) In a loan commitment, the borrower takes down only part of the funds over the specified time-period.
• D) The buyer of a commercial letter of credit fails to perform as promised under a contractual obligation.

---

Definitions:

Diabetes Mellitus

A metabolic disease characterized by high blood sugar levels over a prolonged period, due to insulin production issues or action.

Low Intensity

Referring to activities or processes that have a minimal level of exertion, energy, or impact when compared to higher intensity counterparts.

Moderate Intensity

A level of exercise intensity where physical activity raises the heart rate to 50-70% of the maximum heart rate, noticeable by increased breathing and sweating.

High Intensity

Activities or situations that require a great deal of effort, energy, or concentration.