Generally, when there is asymmetric information
A)a lender will only lend to the government.
B)a lender will only lend to well-known borrowers.
C)practical solutions are devised to allow lending to take place.
D)a lender will cease all lending activities.

Question

Quizplus · Accepted Answer

Practical solutions are often devised, such as credit scoring, collateral requirements, and interest rate adjustments, in order to allow lending to take place despite the presence of asymmetric information. Lenders may also choose to specialize in certain types of borrowers or industries to reduce their information asymmetry.

Generally, When There Is Asymmetric Information