The Administration Costs of a Loan as a Proportion of the Total

question 103

Multiple Choice

The administration costs of a loan as a proportion of the total cost of the loan typically

• A)decrease as the size of the loan increases.Therefore, the larger the loan, other things constant, the lower the interest rate
• B)decrease as the size of the loan increases.Therefore, the larger the loan, other things constant, the higher the interest rate
• C)increase as the size of the loan increases.Therefore, the larger the loan, other things constant, the lower the interest rate
• D)increase as the size of the loan increases.Therefore, the larger the loan, other things constant, the higher the interest rate
• E)increase as the size of the loan increases, but this has no impact on the interest rates charged for large loans compared to small loans

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Definitions:

Quantity Supplied

The amount of a product that producers are willing and able to sell at a given price over a specified period of time.

Quantity Demanded

The amount of a product that consumers are willing and able to purchase at a given price at a specific time.

Excess Demand

A situation where the quantity demanded of a product or service exceeds the quantity supplied at a given price.

Quantity Demanded

The amount of a good or service that buyers are willing and able to purchase at a specific price, holding all other factors constant.