Final answer:
Hazlitt posits that individuals selected for government loans are often poorer risks and there is a higher likelihood of loan defaults compared to those selected for private loans.
Step-by-step explanation:
According to Hazlitt, individuals selected for government loans are typically different from those selected for private loans. Government loans often go to individuals or businesses that may not be as creditworthy, and therefore, such loans could be seen as poorer risks. Hazlitt suggests that the result is a higher likelihood of loan defaults and financial losses.
When assessing the risk of a borrower, a financial institution looks at various factors. A borrower with a history of late payments presents a higher risk, as they are less likely to repay the loan or make timely payments. This is viewed unfavorably by lenders. On the other hand, if a borrower is a firm with a strong record of high profits, it is deemed more creditworthy, and lenders will be more willing to offer better loan terms.
Interest rates also play a significant role in the valuation of loans. If the interest rates have generally risen, existing loans with lower interest rates become less attractive. This is because new loans would now offer a higher rate of return, making the older loans worth less. Conversely, if interest rates have fallen, previously established loans with higher rates become more valuable.
In summary, according to Hazlitt, options a and c from the provided statements are generally true about individuals selected for government loans: a. They will be poorer risks than the individuals selected for private loans and c. There will be a higher percentage of failures, or defaults, on these loans.