Investment spending was depressed in Japan in the 1990s because
A) real interest rates were too high.
B) of regulatory forbearance: the belief that the best way to solve the problem was to pretend it did not exist.
C) nominal interest rates were too high.
D) the yen was undervalued.

Question

Quizplus · Accepted Answer

Investment spending in Japan during the 1990s was depressed partly due to regulatory forbearance, where authorities and financial institutions avoided recognizing and addressing the problems in the banking sector, hoping they would resolve on their own. This led to a lack of confidence and a reluctance to invest.

Investment Spending Was Depressed in Japan in the 1990s Because