Suppose that lenders believe that the government will provide assistance if too many of the lenders' borrowers do not pay back their loans. If lenders expect government assistance they will:
A. make more loans to borrowers who are less likely to repay them.
B. make fewer loans to borrowers who are less likely to repay them.
C. increase the interest rates that they charge borrowers who are less likely to repay loans.
D. not change their lending policies because this expectation is not reasonable.
Answer: A
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