Conditions That Likely Contributed to a Credit Crunch in 2008

question 57

Multiple Choice

Conditions that likely contributed to a credit crunch in 2008 include:

• A)capital shortfalls caused in part by falling real estate prices.
• B)regulated hikes in bank capital requirements.
• C)falling interest rates that raised interest rate risk,causing banks to choose to hold more capital.
• D)increases in reserve requirements.

Learn the AIDA format for writing persuasive application letters.

Understand the AIDA format and its function in application letters.

Identify the types of information necessary for each section of an application letter using the AIDA plan.

Comprehend the importance of tone in telephone interviews and the impact of non-verbal cues.

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Definitions:

Purely Competitive Market

An idealized market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to perfect competition.

Long-run Equilibrium

The state in which all factors of production and costs are variable, leading to a situation where no firm in the market wants to change its output level, assuming no external changes.

Producer Surplus

The difference between the actual price a producer receives (or producers receive) and the minimum acceptable price; the triangular area above the supply curve and below the market price.

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, which leads to firms being price takers.