A shortage of bank capital in 2008 and 2009 led to:
A)decreased money demand.
B)decreased bank lending.
C)increased interest rates.
D)increased reserve requirements.

Question

Quizplus · Accepted Answer

A shortage of bank capital resulted in decreased bank lending because banks had to restrict their lending activities to maintain adequate capital levels. This decrease in lending impaired credit availability for consumers and businesses, which in turn affected economic growth and recovery.

A Shortage of Bank Capital in 2008 and 2009 Led