In Addition to Having a Direct Effect on Increasing Adverse

question 42

Multiple Choice

In addition to having a direct effect on increasing adverse selection problems,increases in interest rates also promote financial crises by ________ firms' and households' interest payments,thereby ________ their cash flow.

• A)increasing; increasing
• B)increasing; decreasing
• C)decreasing; decreasing
• D)decreasing; increasing

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Definitions:

Social Class

A division of society based on social and economic status, influencing an individual’s opportunities, lifestyle, and attitudes.

Profound Effect

A significant or deep impact that greatly influences or changes an individual, society, or situation.

Status Inconsistency

A situation where an individual’s social positions have both high and low ranks; for example, being high in educational attainment but low in income.

Social Mobility

The ability or movement of individuals or groups to move within or between social strata in a society.