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During Recessions,the Value of Collateral Decreases and Corporate Profits Decrease,so

Question 40

Multiple Choice

During recessions,the value of collateral decreases and corporate profits decrease,so firms do not have cash to finance new investment projects.Therefore,credit rationing depends on the state of the economy.This situation is known as the


A) risk acceptance cost.
B) lender's dilemma.
C) default premium.
D) financial accelerator.

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