During the Great Depression,as Real Interest Rates Rose,good Credit Risks

question 50

Multiple Choice

During the Great Depression,as real interest rates rose,good credit risks were less likely to seek loans.This process illustrates the phenomenon of ________.

• A)adverse selection
• B)moral hazard
• C)poor monetary policy
• D)debt deflation

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Definitions:

Events of Default

Specific conditions or occurrences that trigger a breach of contractual obligations.

Loan Agreement

A legal contract between a borrower and a lender outlining the terms and conditions of a loan.

Creditor

An individual or institution to whom money is owed.

Technical Default

A failure to meet some specific terms of a loan agreement, lease, or another contract, other than the failure to make payments as and when they fall due.