A decrease in "financial frictions" is associated with ________.
A)a decrease in the credit spread
B)more efficient functioning of financial markets
C)reduced real cost of borrowing for businesses
D)an increase in planned investment spending
E)all of the above

Question

Quizplus · Accepted Answer

Reducing financial frictions allows financial markets to function more efficiently, which leads to a decrease in the credit spread and lower borrowing costs. This, in turn, can increase planned investment spending by businesses. Therefore, all of the above choices are associated with a decrease in financial frictions.

A Decrease in "Financial Frictions" Is Associated with ________