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      Question

      If interest rate reductions fail to increase loan

      demand, it may indicate:
      A High price elasticity Correct Answer Incorrect Answer
      B Low price elasticity Correct Answer Incorrect Answer
      C Strong differentiation Correct Answer Incorrect Answer
      D Effective targeting Correct Answer Incorrect Answer
      E High brand recall Correct Answer Incorrect Answer

      Solution

      Low elasticity means demand is not sensitive to price changes. Why others are incorrect: High elasticity would show demand rise; Differentiation and recall not directly linked; Targeting may not be issue. Banking Example: Customers delaying loans due to economic uncertainty.

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