Credit Rationing Occurs When a Bank

question 53

Multiple Choice

Credit rationing occurs when a bank

• A) refuses to make a loan of any amount to a borrower, even when she is willing to pay a higher interest rate.
• B) restricts the amount of a loan to less than the borrower would like.
• C) does either A or B of the above.
• D) does neither A nor B of the above.

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Definitions:

Moral Guardian

An individual or entity that promotes and enforces traditional ethical standards and values within a community or society.

Freud

Sigmund Freud, an Austrian neurologist who founded psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Reality Principle

Principle by which the ego functions; the satisfaction of the demands of the id only when negative consequences will not result.

Immediate Gratification

The desire to experience pleasure or fulfillment without delay or deferment, often prioritized over long-term gain.