Question

In the Grameen book, Sufiya purchases raw materials for her business daily, and needs to continue to borrow the same amount of funds regularly to replenish her raw material supply. This is an example of:

a.

Adverse selection

b.

Cost of funds

c.

Dynamic Incentives

d.

Perfect Competition

Answer 1

If we borrow the money or fund we must pay the interest.

And payment of interest is our cost of fund

Hence ans.

b cost of fund is correct option

This not a adverse selection or incentive nor the perfect competition.