When a bank refuses to lend at high interest rates, it is
A) requiring collateral.
B) requiring compensating balances.
C) credit rationing.
D) none of the above.

Name: When a bank refuses to lend at high interest rates, it is A) requiring collateral. B) requiring compensating balances. C) credit rationing. D) none of the above.
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Credit rationing occurs when a bank refuses to lend at high interest rates, often to avoid taking on too much risk or because it doubts the borrower's ability to repay.

When a Bank Refuses to Lend at High Interest Rates