If the Overnight Rate Is Only 1%,the Economy Is Dangerously

question 187

Multiple Choice

If the overnight rate is only 1%,the economy is dangerously close to:

• A) an inflationary spiral.
• B) a liquidity trap.
• C) very high unemployment.
• D) another recession.

---

Definitions:

Capital Structure

The mix of different forms of capital financing used by a company, including debt, equity, and other financial instruments.

Debt

Amount of money borrowed by one party from another, used by many corporations to grow beyond what they could from earnings alone.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing assets minus liabilities.

Stock Repurchase

A company's buyback of its own shares from the marketplace, reducing the number of outstanding shares, which can increase the value of remaining shares.