During Recessions,the Value of Collateral Decreases and Corporate Profits Decrease,so

question 40

Multiple Choice

During recessions,the value of collateral decreases and corporate profits decrease,so firms do not have cash to finance new investment projects.Therefore,credit rationing depends on the state of the economy.This situation is known as the

• A) risk acceptance cost.
• B) lender's dilemma.
• C) default premium.
• D) financial accelerator.

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Definitions:

Part-Time

Part-Time describes employment with fewer hours per week than a full-time job, often offering limited benefits and flexibility.

Earnings

The amount of money that a company makes from its activities, often reported as profit on a financial statement.

Restaurant

A business establishment where meals or refreshments may be purchased and consumed by patrons.

Weekdays

The days of the week excluding the weekend; typically refers to Monday through Friday.