Theoretically, What Are the Consequences If the Government Assumes the Burden

question 56

Multiple Choice

Theoretically, what are the consequences if the government assumes the burden of bad loans?

• A)Citizens will default on their mortgages.
• B)Banks will learn from their mistakes and pay back the burden with interest.
• C)Ultimately, the government will profit.
• D)Firms will be encouraged to continue their risky behavior.

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Definitions:

Pension Accounting and Reporting

The process of recording and communicating information regarding a company's pension obligations and related costs in its financial statements.

Fund Asset Gains and Losses

Changes in the value of investment holdings in a fund that impact its overall performance.

Expected Rate of Return

The anticipated return on an investment over a specific period, taking into account both the risk of the investment and historical performance trends.

Operating Income

This refers to the profit a company generates from its normal business operations, excluding any income from investments or non-recurring expenses.