As a Result of the Recession in 2008, the Default

question 190

Multiple Choice

As a result of the recession in 2008, the default risk increased. How did this change affect the loanable funds market?

• A) There was a movement down along the demand for loanable funds curve.
• B) There was a movement up along the supply of loanable funds curve.
• C) There was a leftward shift in the supply of loanable funds curve.
• D) There was a rightward shift in the supply of loanable funds curve.

Recognize the regulatory bodies of financial markets and institutions, including their roles and responsibilities.

Describe the process of security issuance and the distinction between primary and secondary markets.

Explain insider trading and its implications in the financial markets.

Understand the different types of financial instruments and securities, their risk levels, and insurance mechanisms.

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Definitions:

Delay Gratification

The capacity to withstand the urge for an instant gratification in favor of a future reward.

Immediate Reward

A reward received directly after completing a task or activity, often motivating future behavior.

Overjustification Effect

A phenomenon where providing excessive external rewards for an already internally rewarding activity decreases the intrinsic motivation to perform that activity.

Opponent-process Effect

A psychological and neurological model that explains contrasting color after-images and emotional contrasts.