As a Result of the Recession in 2008, the Default

question 148

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

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Definitions:

Bond Portfolio Management

The process of creating and managing a collection of bonds to achieve specific investment objectives, taking into account factors like risk tolerance, return requirements, and liquidity needs.

Asset Matching

A strategy used in financial planning to align investments with future liabilities, ensuring that cash flows meet financial obligations when they arise.

Roth IRA

A retirement savings account allowing individuals to contribute after-tax income, with tax-free withdrawals on both contributions and earnings after age 59½.

Traditional IRA

A Traditional IRA is a type of retirement account that allows individuals to direct pre-tax income toward investments that can grow tax-deferred until withdrawals begin at retirement age.