The Recognition That Increased Availability of Credit Leading to Higher

question 15

Multiple Choice

The recognition that increased availability of credit leading to higher asset prices and financial buffers at lending institutions and therefore further expansion of credit availability is referred to as ________.

• A) microprudential supervision
• B) macroprudential supervision
• C) the leverage cycle
• D) a liquidity crisis

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Definitions:

Specialization

The process in which individuals, firms, or countries focus on producing a narrow range of products or services, often to improve efficiency and productivity.

Division of Labor

The allocation of different tasks to different people or groups in an effort to increase efficiency and productivity.

Productivity

A measure of the efficiency with which goods and services are produced, often quantified as output per unit of input.

Economic Profits

The surplus after a firm subtracts its total costs from its total revenue, considering both explicit and implicit costs.