Conditions That Likely Contributed to a Credit Crunch During the Global

question 3

Multiple Choice

Conditions that likely contributed to a credit crunch during the global financial crisis include

• A)capital shortfalls caused in part by falling real estate prices.
• B)regulated hikes in bank capital requirements.
• C)falling interest rates that raised interest rate risk,causing banks to choose to hold more capital.
• D)increases in reserve requirements.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a market.

Production Possibilities Curve

A graphical representation that shows the maximum number of goods or services that can be produced using limited resources efficiently.

Technology Fixed

A scenario in economic models where the level of technology is assumed to remain constant, ignoring any potential technological advancements or changes.

Unemployment

The condition of being without a job, while actively looking for work.