Suppose You Have Money to Lend,but Will Do So Only

question 43

Multiple Choice

Suppose you have money to lend,but will do so only if you are compensated for the risk of default.If you set a high interest rate on your loan,a likely consequence is that ________.

• A)safe borrowers will look elsewhere,and only risky borrowers will find your terms attractive
• B)risky borrowers will look elsewhere,so your money is more likely to go to a safe borrower
• C)competition from other lenders will force you to lower your interest rate
• D)you will be prosecuted for predatory lending

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Definitions:

Dairy Farmers

Individuals or entities engaged in the production of milk and possibly other dairy products from livestock such as cows.

Price Variability

The extent to which prices fluctuate over time, affecting the stability of markets and economic planning for both producers and consumers.

Farming Resources

The inputs required for agricultural production, including land, labor, machinery, and capital.

Price Subsidies

Financial assistance provided by the government to lower the cost of goods or services.