The recognition that increased availability of credit leading to higher asset prices and financial buffers at lending institutions and therefore further expansion of credit availability is referred to as ________.
A) microprudential supervision
B) macroprudential supervision
C) the leverage cycle
D) a liquidity crisis

Question

Quizplus · Accepted Answer

The leverage cycle describes how increased availability of credit can lead to higher asset prices, which in turn improves the financial buffers at lending institutions, allowing them to extend even more credit. This cycle emphasizes the interconnectedness of credit availability, asset prices, and leverage in the financial system.

The Recognition That Increased Availability of Credit Leading to Higher