Volatile hyperinflation causes financial intermediation to:
A) become more efficient.
B) favor long-term lending.
C) favor first-time borrowers.
D) break down.

Question

Quizplus · Accepted Answer

Volatile hyperinflation causes uncertainty in the economy and makes it difficult for financial intermediaries to accurately assess borrower risk and set interest rates. As a result, they may be hesitant to lend, or may require high interest rates to compensate for the uncertainty. This can lead to a breakdown in financial intermediation, as borrowers may not be able to access the credit they need to invest and grow their businesses.

Volatile Hyperinflation Causes Financial Intermediation To