Under financial repression, which statements are true: I. banks ration loans by non-price means; II. banks face pressure to lend to the politically connected; III. banks charge a high premium on foreign investments; IV. banks depend on foreign banks to set interest rates?
Correct answer D. I and II only
Explanation
Financial repression holds interest rates below market levels, so excess loan demand is rationed by non-price criteria, often favouring politically connected borrowers.
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