When We Say That the Financial Crisis Can Be Viewed

question 44

Multiple Choice

When we say that the financial crisis can be viewed as a balance sheet problem,this is descriptive of

• A)banks' assets being greater than their liabilities.
• B)banks possessing assets that are declining in value,resulting in banks approaching insolvency.
• C)banks having low leverage ratios.
• D)banks engaging in regulatory capital arbitrage.
• E)none of the above

---

Definitions:

Normal Returns

The minimum profit necessary for a company to remain competitive in the market, essentially covering opportunity costs.

Perfectly Elastic

Describes a situation in demand or supply where the quantity demanded or supplied changes infinitely in response to any change in price.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit, which leads to price being equal to marginal cost.

Monopoly Market

A market structure where a single seller dominates, without any close substitutes for the product or service.