The phenomenon that some consumers pay a higher interest rate when they borrow than the interest rate they receive when they lend is best described as an example of
A)a credit market imperfection.
B)irrational behaviour.
C)competitive disequilibrium.
D)a vast banking conspiracy.
E)the burden of public debt.

Question

Quizplus · Accepted Answer

This phenomenon is an example of a credit market imperfection, where lenders charge higher interest rates to borrowers who are seen as more risky. This creates a mismatch between the interest rates that borrowers and lenders receive.

The Phenomenon That Some Consumers Pay a Higher Interest Rate