If banks fear failure and become more conservative in making loans, then the sharp decline in bank lending is called a credit:
A) crunch.
B) hazard.
C) bubble.
D) swap.

Question

Quizplus · Accepted Answer

A credit crunch is a sudden and sharp reduction in the availability of credit due to banks becoming more cautious in making loans, which can result in a slowdown or contraction in economic activity.

If Banks Fear Failure and Become More Conservative in Making