Credit rationing refers to A. the increase in the interest rate that occurs when the supply of credit increases. B. a restriction in the availability of credit. C. the increase in the interest rate that occurs when the supply of credit decreases.

Question

Business

Elaine Burton

7 July, 02:51

Credit rationing refers to A. the increase in the interest rate that occurs when the supply of credit increases. B. a restriction in the availability of credit. C. the increase in the interest rate that occurs when the supply of credit decreases.

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Answers (1)

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Sean Gallagher · Answer 1

The answer to this question is B. a restriction in the availability of credit.

Explanation:

Credit restriction occurs when at the prevailing market interest rate, demand exceeds supply, but lenders are not willing to either loan more funds, or raise the interest rate charged, as they are already maximizing profits.

Hence the answer to this question is B. a restriction in the availability of credit.