A Credit Crunch Causes a Recession Because

question 146

Multiple Choice

A credit crunch causes a recession because:

• A)potential borrowers can't get loans or must pay very high interest rates, so they cut back on spending.
• B)banks have a surplus of funds to loan, so interest rates fall to very low levels.
• C)unemployment falls to very low levels, causing a problem of inflation.
• D)interest rates are so low that investors' incomes fall, and they decrease their spending.

---

Definitions:

Residual Standard Deviation

A statistical measure that quantifies the amount by which an investment's returns deviate from its expected benchmark performance.

Treynor Measure

A performance metric for determining how well an investment portfolio or fund has performed on a risk-adjusted basis, using beta as the risk measure.

Residual Standard Deviation

A measure of the amount of variability or dispersion of a set of data points around a regression line not explained by the regression itself.