In the Early 1980s, When a Recession Raised Concern About

question 50

Multiple Choice

In the early 1980s, when a recession raised concern about corporations' ability to repay debt, there was a dramatic increase in

• A)the yield on medium-quality corporate bonds relative to the yield on long-term Treasury securities.
• B)the yield on long-term Treasury securities relative to the yield on medium-quality corporate bonds.
• C)the yield on six-month T-bills relative to the yield on long-term Treasury securities.
• D)the yield on interest-earning checking deposits in commercial banks relative to the yield on six-month T-bills.

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Definitions:

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.

Externalities

Occurs when the consumption or production of a good affects someone who does not directly consume or produce that good, which can be either positive or negative.

Costs

Expenses incurred in the production of goods or in the provision of services, including labor, materials, and overheads.

Benefits

The advantages or positive outcomes gained from actions or decisions, often considered in economic, social, or health contexts.