Financial repression has been known to result in the misallocation of:
A) interest rates
B) commodities
C) government spending
D) capital
E) labor

Question

Quizplus · Accepted Answer

Financial repression, which refers to government policies that limit the free market's ability to determine interest rates, can lead to the misallocation of capital. This is because artificially low interest rates can incentivize individuals and businesses to take on more debt than they can handle or invest in projects with low returns. As a result, capital may be lent to unproductive sectors, resulting in a misallocation of resources.

Financial Repression Has Been Known to Result in the Misallocation