In addition to having a direct effect on increasing adverse selection problems,increases in interest rates also promote financial crises by ________ firms' and households' interest payments,thereby ________ their cash flow.
A) increasing; increasing
B) increasing; decreasing
C) decreasing; increasing
D) decreasing; decreasing

Question

Quizplus · Accepted Answer

Increases in interest rates lead to higher interest payments for firms and households, which in turn reduces their cash flow.

In Addition to Having a Direct Effect on Increasing Adverse