Corporate scandals involving Enron and Arthur Andersen reduced investment and aggregate spending because these scandals

Question

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Corporate scandals involving Enron and Arthur Andersen increased adverse selection and moral hazard in the market, as investors became more cautious and skeptical about the reliability and accuracy of financial statements and disclosures. This led to a decrease in investment and aggregate spending as investors were more hesitant to invest in companies and the market, leading to a decrease in economic activity. The other options do not directly relate to the impact of corporate scandals on investment and aggregate spending.

Corporate Scandals Involving Enron and Arthur Andersen Reduced Investment and Aggregate