A Credit Crunch Occurs When

question 14

Multiple Choice

A credit crunch occurs when

• A)banks do not lend as they ordinarily would, but rather have much higher requirements for borrowers to qualify for loans than normal.
• B)inflation rises, driving up interest rate near their legal ceiling, causing people to pull their funds out of banks.
• C)regulators pressure banks to increase loans to under-served groups in society.
• D)government officials force banks to lend in areas where they wish to establish branches.

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Definitions:

McGregor

Refers to Douglas McGregor, a social psychologist, known for developing theories X and Y on workforce motivation and management.