There are two ways in which an imperfect credit market manifests itself. One is in the form
Question:
There are two ways in which an imperfect credit market manifests itself. One is in the form of a higher interest rate; the other is in the form of a ceiling on loans. Discuss how these two phenomena may come about. In particular, why is it that a higher interest rate cannot always compensate for the possibility of default and that a credit limit needs to be set? [See Chapter 14 for more on these matters.]
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 33% (3 reviews)
In imperfect credit markets lenders face uncertainties and risks associated with borrower behavior This imperfection can manifest in two main ways thr...View the full answer
Answered By
Jonas Araujo
I have recently received the degree of PhD. In Physics by the Universidade Federal do Maranhão after spending a term in Durham University, as I have been awarded a scholarship from a Brazilian mobility program. During my PhD. I have performed research mainly in Theoretical Physics and published works in distinguished Journals (check my ORCID: https://orcid.org/0000-0002-4324-1184).
During my BSc. I have been awarded a scholarship to study for a year in the University of Evansville, where I have worked in detection-analysis of photon correlations in the the Photonics Laboratory. There I was a tutor in Electromagnetism, Classical Mechanics and Calculus for most of that year (2012).
I am very dedicated, honest and a fast learner, but most of all, I value a job well done.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
It is Tuesday afternoon, February 14, 2012. Richard May, Assistant Treasurer at American Digital Graphics (ADG), sits in his office on the thirty-fourth floor of the building that dominates...
-
Case Study: Quick Fix Dental Practice Technology requirements Application must be built using Visual Studio 2019 or Visual Studio 2017, professional or enterprise. The community edition is not...
-
Which of the following is most likely to be recognized as a defining characteristic of the public good? a) The good is a non-rival element. B) the good is a non-excludable item C) The good is both A...
-
Consider the following situation: Your manager comes to you and says, I dont understand why everyone is talking about the total-life-cycle costing approach to product costing. As far as I am...
-
Do you really think that entrepreneurs think effectually? What about yourself do you sometimes think effectually? In what ways is it good? Then why are we taught in business classes to always think...
-
A common expected value. Here is a common setting that we simulated in Chapter 19: there are a fixed number of independent trials with the same two outcomes and the same probabilities on each trial....
-
Moe Green estimates the cost of future projects for a large contracting firm. Mr. Green uses precisely the same techniques to estimate the costs of every potential job, and formulates bids by adding...
-
The account balances appearing on the trial balance were taken from the general ledger of Copy Service at 10/31/19. Additional information for the month of October, which has not been recorded in the...
-
Explain carefully why greater inequality in wealth distribution tends to shift the supply curve of labor to the right and the demand curve to the left when there are imperfect capital markets. In the...
-
Pooh is a country with only two occupations. You can work as a laborer or you can become an entrepreneur, who hires labor and makes profits. To become an entrepreneur, you need a loan of 20,000 pahs...
-
Refer to the prices of Japanese automobile imports under the VER (Figures 9-5) and answer the following: a. What component of the price of imported automobiles from Japan rose the most during the...
-
Give a brief general description of the number of degrees of freedom. A. The number of degrees of freedom for a collection of sample data is the number of unique, non-repeated sample values. The...
-
Suppose you are given a data frame df. df = pd.DataFrame({'Click_ID':['A', 'B', 'C', 'D'], 'Count':[100, 200, 300, 400]}) In many data science projects, you are required to convert a dataframe into a...
-
Which of the following is an essential element of Six Sigma programs? Group of answer choices Setting specific goals for projects. Striving for low levels of Sigma. Striving for low levels of Cp and...
-
Here are summary statistics for randomly selected weights of newborn girls: n = 36, x=3180.6 g, s = 700.5 g. Use a confidence level of 99% to complete parts (a) through (d) below. a. Identify the...
-
The maximum employee earnings on which labour standards plan will be calculated on in 2019 was: Question 1 options: a) 67,500 b) 79,500 c) 86,500 d) 76,500 Question 2 (1 point) Question 2 options:...
-
(Requires the subsection on Combining Subspaces, which is optional.) Let U and W be vector spaces. Define a new vector space, consisting of the set U Ã W = {(, ) | U and W} along with these...
-
Beginning with a country that has a trade deficit, demonstrate graphically what will happen to a countrys potential output with globalization if that countrys costs of production fall. Explain your...
-
Derive the steady state level of capital intensity and labor productivity in the Solow model with a Cobb-Douglas production function, assuming macroeconomic equilibrium (equality of savings and...
-
What are the differences between autocracies and democracies in terms of the provision of public services? Explain.
-
To what extent do Mancur Olson's ideas of the roving and stationary bandit explain differences among dictatorships in developing countries?
-
Saly paid $52,000 a year paid on a weekly basis. last pay she had $250 withheld in Income Tax, $48.97 for CPP and $15.80 for EI. an additional $and 25.00 in tax are deducted each pay. She allowed to...
-
Required information [The following information applies to the questions displayed below.] Dain's Diamond Bit Drilling purchased the following assets this year. Asset Drill bits (5-year) Drill bits...
-
Which of the following partnership items are not included in the self-employment income calculation? Ordinary income. Section 179 expense. Guaranteed payments. Gain on the sale of partnership...
Study smarter with the SolutionInn App