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:

Cost of Producing

The total expense incurred in the manufacture or production of a good, including raw materials, labor, and overhead.

Metal Alloy

A substance composed of two or more metals or a metal and a non-metal, mixed together to attain desired physical or chemical properties.

Fixed Proportions

A production technology assumption where inputs must be used in constant, unchanging ratios to produce outputs.

Average Cost

The total cost of production divided by the number of units produced, representing the cost per unit of output.