Which of the Following Is True of the Credit Crunch

question 5

Multiple Choice

Which of the following is true of the credit crunch that occured in the U.S.economy in the early 1990s?

• A)The credit crunch affected only big business firms.
• B)Small business firms that were unable to obtain bank loans were most affected during the credit crunch.
• C)The main reason behind the credit crunch was the dramatic decline in housing prices.
• D)The government bailed out many of the financial firms that were affected by the credit crunch.

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Definitions:

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill, exceeding its carrying amount on the balance sheet.

Capital Assets

Long-term assets acquired for business use and not expected to be converted to cash in the coming year, typically including buildings, machinery, and equipment.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Subsidiary

An entity that is controlled by another entity (known as the parent company).