A Vicious Cycle of Deleveraging Occurs When Sales of Assets

question 191

True/False

A vicious cycle of deleveraging occurs when sales of assets to cover losses produce negative balance sheet effects on other firms, causing creditors to call in their loans, which forces further sales of assets and further decreases in prices.

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Definitions:

Modeling

Observing and copying or imitating the behavior of others.

Social Learning Paradigm

A theory that proposes people learn behaviors, values, and attitudes through observation and imitation of others within a social context.

Bobo Doll

An inflatable doll used in social psychology experiments to demonstrate how individuals, especially children, learn aggression through observation.

Aggression Research

The study of factors and conditions that elicit aggressive behavior in individuals and how it can be managed or mitigated.