In a Vicious Cycle of Deleveraging

question 41

Multiple Choice

In a vicious cycle of deleveraging:

• A)banks buy some type of asset and push the price up to an unreasonable level.
• B)banks are forced to sell assets at a deep discount to reduce their debt.
• C)depository banks and shadow banks engage in maturity transformation.
• D)the Fed is prohibited from acting as a lender of last resort.

---

Definitions:

Pleasure Principle

A concept in psychoanalytic theory that describes the instinctual seeking of pleasure and avoiding of pain to satisfy biological and psychological needs.

Personality Theory

A framework for understanding the thoughts, emotions, and behaviors that make up an individual's personality.

Gratification

The state of being satisfied or receiving pleasure from something, often linked with the fulfillment of desires or needs.

Pleasure Seeking

The motivation or action taken with the primary goal of achieving personal gratification or enjoyment.