A Credit Crunch Causes a Recession Because

Multiple Choice

A credit crunch causes a recession because:

A) potential borrowers can't get loans or must pay very high interest rates, so they cut back on spending.
B) banks have a surplus of funds to loan, so interest rates fall to very low levels.
C) unemployment falls to very low levels, causing a problem of inflation.
D) interest rates are so low that investors' incomes fall, and they decrease their spending.