Credit Rationing Occurs When Lenders Charge Higher Interest Rates on the Loans

question 14

True/False

Credit rationing occurs when lenders charge higher interest rates on the loans they make to riskier borrowers.

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Definitions:

Marginal Cost

The alteration in the overall cost of production that occurs with each additional unit produced.

Total Revenue

The amount a firm receives for the sale of its output.

Nash Equilibrium

A concept within game theory where no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged.

Profit-Maximizing

The process by which a firm determines the price and output level that returns the maximum profit.