A-level Paper 2, June 2022The National and Global Economy
A-level Paper 2, June 2022, Q5(b)
Which one of the following would be a risk if ‘only minimal checks were made on borrowers’ in this loan scheme?
Multiple choice1 mark
Context
In May 2020, the UK government introduced a loan scheme to help small businesses survive the downturn in the economy. Small businesses could borrow up to £50 000 at an interest rate of 2.5% for up to 6 years from a bank. The government guaranteed 100% of the loans, to enable banks to issue them quickly, and only minimal checks were made on borrowers.
AAsymmetric information
BCrowding out
CMarket rigging
DSpeculation
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