Because Larger Loans Create Greater Incentives for Borrowers to Engage

Multiple Choice

Because larger loans create greater incentives for borrowers to engage in undesirable activities that make it less likely they will repay the loans,banks

A) ration credit, granting borrowers smaller loans than they have requested.
B) ration credit, charging higher interest rates to borrowers who want large loans than to those who want small loans.
C) ration credit, charging higher fees as a percentage of the loan to borrowers who want large loans than to those who want small loans.
D) do none of the above.