As a Result of a Recession, the Default Risk Increases

question 47

Multiple Choice

As a result of a recession, the default risk increases.How does this change affect the loanable funds market?

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

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Definitions:

Salary Expense

Salary expense refers to the total amount paid by an employer to its employees for work performed during a specific period, which is reported on the income statement.

Cash Paid

Amounts of cash disbursed by a business for various purposes, including operating expenses, asset purchases, and debt repayments.

Free Cash Flow

A financial metric indicating the amount of cash generated by a company after accounting for capital expenditures.

Cash Provided

Funds that are generated and available for use, typically referring to cash from operating activities.