Because of the adverse selection problem,
A) good credit risks are more likely to seek loans causing lenders to make a disproportionate amount of loans to good credit risks.
B) lenders may refuse loans to individuals with high net worth, because of their greater proclivity to "skip town."
C) lenders are reluctant to make loans that are not secured by collateral.
D) lenders will write debt contracts that restrict certain activities of borrowers.
Answer: C
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