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) irrational behavior.
B) a credit market imperfection.
C) a vast banking conspiracy.
D) the burden of public debt.
E) competitive disequilibrium.

Question

Quizplus · Accepted Answer

This phenomenon is typically due to a credit market imperfection, such as information asymmetry or limited access to credit for certain borrowers. It is not necessarily irrational behavior and there is no evidence of a vast banking conspiracy. Public debt and competitive disequilibrium are unrelated to this specific phenomenon.

The Phenomenon That Some Consumers Pay a Higher Interest Rate