The Substantial Decline in Interest Rates During the Credit Crisis

question 38

Multiple Choice

The substantial decline in interest rates during the credit crisis is attributed to which of the following changes in the market for loanable funds?

• A) an increase in both the supply of and the demand for loanable funds
• B) a decrease in both the supply of and the demand for loanable funds
• C) a decrease in the supply of loanable funds and an increase in the demand for loanable funds
• D) an increase in the supply of loanable funds and a decrease in the demand for loanable funds

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Definitions:

Risk-taking

The willingness to engage in actions that can lead to significant gains or losses, embracing the potential for failure as a path to success.

High Trust

A condition or environment in which individuals or parties have a strong belief in the reliability, integrity, and competence of each other.

Social Loafing

A phenomenon wherein people put forth less effort when they work in teams than when they work alone.

Supporting Evidence

Information or facts provided to support or validate a claim, theory, or argument.