(Last Word) The greater the leverage in the financial system, all else equal,
A)the smaller the monetary multiplier.
B)the smaller the profit and loss margins of financial firms.
C)the greater the stability of the financial system.
D)the greater the instability of the financial system.

Question

Quizplus · Accepted Answer

Higher leverage in the financial system increases risk, making the system more unstable as firms are more vulnerable to losses and financial shocks.

(Last Word) the Greater the Leverage in the Financial System