Most Economists Believe That the Return of ________ During the 2007-2009

question 119

Multiple Choice

Most economists believe that the return of ________ during the 2007-2009 recession is a key reason why the recession was so severe.

• A)high tariffs
• B)financial instability
• C)rapid inflation
• D)high interest rates

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Definitions:

Financial Leverage

Financial leverage refers to the use of debt (borrowed funds) to amplify the potential returns to shareholders. It increases the potential for both gains and losses.

Operating Risk

The risk arising from the day-to-day operations of a company, indicating the variability in operating income due to changes in revenue and expenses.

Financial Risk

The potential for losses due to factors affecting the overall financial market or specific securities within a portfolio.

EPS

Earnings Per Share represents the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.