A Situation in Which Borrowers Cannot Find Credit or Must

question 156

Multiple Choice

A situation in which borrowers cannot find credit or must pay very high interest rates for loans is called a:

• A)liquidity trap.
• B)zero-bound limit.
• C)credit crunch.
• D)stagflation.

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Definitions:

Price-Taking Firms

Companies that accept the market price as given and have no power to influence that price due to competition and market structure.

Economic Profit

Profit calculated by subtracting both explicit and implicit costs from total revenues, providing a more complete measure of real profitability.

Quantity

The amount or number of a product or service available or demanded in a market.

Costs

The expense incurred in the production of goods or services or in the undertaking of any activity.