Economics: The Basics 1st Edition by Mike Mandel

Exercise 5

Your brother-in-law wants to borrow $50,000 to start a new business selling T-shirts online. Will each of the following events make you more or less likely to lend him the money? Give the appropriate reason for each answer (time value of money or risk of default).
a) The interest rate on savings accounts goes up.
b) Your teenager wins a full scholarship to college.
c) You discover that your brother-in-law has started a business before and failed.
d) Economists predict a recession for next year.
e) Your neighbor comes to you with a hot stock tip.