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The Average Default Rate in the Economy Is 1

question 15

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The average default rate in the economy is 1.5% of the face value of outstanding debt defaults per year. What is the average time between defaults if there are 1000 firms alive on average?


Definitions:

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior.

Punitive Toilet Training

A toilet training approach that uses punishment to discourage undesired responses or behaviors in early childhood development.

Obsession

A persistent, intrusive, and unwanted thought or urge that causes distress or anxiety.

Unresolved Electra

A concept from Freudian psychology suggesting unresolved competition with the mother for the affection of the father.

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