A reduction in the value of collateral is called:
A) intertemporal substitution.
B) collateral damage.
C) irreversible investment.
D) labor adjustment cost.

Question

Quizplus · Accepted Answer

A reduction in the value of collateral is commonly referred to as "collateral damage." This can occur if the value of the asset used as collateral for a loan declines, potentially leading to financial losses for the lender if the borrower defaults on the loan. Intertemporal substitution, irreversible investment, and labor adjustment costs are all different economic concepts that are not directly related to the value of collateral.

A Reduction in the Value of Collateral Is Called