A Decrease in the Willingness or Ability of Banks to Lend

question 46

Multiple Choice

A decrease in the willingness or ability of banks to lend has a significant impact on the economy because

• A)it causes the short-run aggregate supply curve to shift to the left.
• B)it causes the short-run aggregate supply curve to shift to the right.
• C)some borrowers from banks are unable to borrow from nonmoney markets.
• D)bank profits decline and employment in the banking sector contracts.

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Definitions:

Validity

The extent to which a concept, conclusion or measurement is well-founded and likely corresponds accurately to the real world.

Debrief

The process of providing a detailed and explanatory feedback or information following a task, experiment, or event.

Psychological Information

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Causal Conclusions

Judgments about the existence or strength of a cause-and-effect relationship between two variables.