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    Exam 8: Why Do Financial Crises Occur and
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    Debt Deflation Refers to
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Debt Deflation Refers to

Question 1

Question 1

Multiple Choice

Debt deflation refers to


A) an increase in net worth, leading to a relative fall in general debt levels.
B) a decline in general debt levels due to deleveraging.
C) a decline in bond prices as default rates rise.
D) a decline in net worth as price levels fall while debt burden remains unchanged.

Correct Answer:

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