Which of the Following Was the Main Reason for Increased

question 65

Multiple Choice

Which of the following was the main reason for increased counterparty risk in the shadow banking system prior to the financial crisis of 2007-2009?

• A) increased leverage
• B) government insuring money market deposits
• C) many firms borrowing long term for short-term investments
• D) trading of derivatives on exchanges

---

Definitions:

Demand Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in the price of that good.

Sales Tax

Sales tax is a government-imposed levy on the sale of goods and services, paid by the purchaser at the time of sale.

Excise Tax

A tax charged on specific goods and services, such as tobacco, alcohol, and fuels, often intended to discourage their use or generate revenue.

Local Governments

Administrative bodies that manage and govern specific areas within a country, such as cities, towns, or regions, often responsible for local services and laws.