The effect of the subprime loan crisis pushed the ________. In Figure 14.3, this is shown as a movement from point ________ to ________.
A) inflation rate down; c; d
B) long-run real interest rate down; c; b
C) financial friction up; c; d
D) market real interest rate down; a; b
E) unemployment rate up; c; d

Question

Quizplus · Accepted Answer

The subprime loan crisis increased financial friction, which is depicted as a movement from point c to d in the figure.

The Effect of the Subprime Loan Crisis Pushed the ________