As a Result of the Subprime Collapse,the Demand for Low

question 33

Multiple Choice

As a result of the subprime collapse,the demand for low -quality corporate bonds ________,the demand for high-quality Treasury bonds ________,and the risk spread ________.

• A) increased; decreased; was unchanged
• B) decreased; increased; increased
• C) increased; decreased; decreased
• D) decreased; increased; was unchanged

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Definitions:

Separating Equilibrium

Separating equilibrium occurs in a game or market when different types of participants choose distinctly different strategies or products, revealing their type.

Pooling Equilibrium

A situation in a market where all agents, regardless of their type or quality, provide the same signal, making it impossible to distinguish between them based on that signal alone.

Microeconomics

The branch of economics that studies individual agents and markets, decision-making processes, and the outcomes of interactions.

Wage Cut

A reduction in the rate of pay received by workers.