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Falling Capital Asset Prices Can Have Which of the Following

Question 75

Multiple Choice

Falling capital asset prices can have which of the following effects on a country's economy?


A) Decreased capital asset prices decrease wealth and with it consumption, borrowing, output, and employment.
B) Decreased capital asset prices can adversely affect financial institutions by decreasing the value of their assets while leaving their liabilities largely unchanged.
C) Decreased stock, bond, and real estate prices can cause bankruptcies of financial and non-financial firms on such a large scale that the financial system and real sectors of an affected economy collapse.
D) All of the above are correct.

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