When Banks and Other Financial Institutions Become Insolvent,________

Multiple Choice

When banks and other financial institutions become insolvent,________.

A) the problem of asymmetric information becomes more acute
B) it is easier to distinguish the good creditors and borrowers from the bad
C) surviving creditors will attract borrower-spenders by lowering the real interest rate
D) the resulting increase in short-run aggregate supply will discourage investment