An Increase in the Default Premium

question 62

Multiple Choice

An increase in the default premium

• A)lowers the real interest rate and firms invest more.
• B)shifts the optimal investment schedule to the right.
• C)shifts the optimal investment schedule to the left.
• D)will prevent firms from defaulting on their loans.
• E)raises the safe credit market interest rate.

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Definitions:

Initiative Vs. Guilt

The third stage of Erik Erikson's theory of psychosocial development, where children face the challenge of taking initiative in activities versus feeling guilty for their actions and thoughts.

Industry Vs. Inferiority

A stage in Erik Erikson's theory of psychosocial development where children develop a sense of competence and belief in their skills or feel inferior and doubt their abilities.

Autonomy Vs. Shame

A stage in Erik Erikson's theory of psychosocial development where toddlers develop a sense of personal control over physical skills and a sense of independence, or otherwise experience shame and doubt about their abilities.

Trust Vs. Mistrust

A stage in Erik Erikson's theory of psychosocial development where infants learn whether or not they can trust the people around them.