Author Question: The Paradox of Leverage states that: a. Excessive leverage is really just an illusion. It occurs ... (Read 69 times)

Alygatorr01285

  • Hero Member
  • *****
  • Posts: 564
The Paradox of Leverage states that:
 a. Excessive leverage is really just an illusion. It occurs when companiesmisestimat e the value of their assets and equity.
  b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise.
  c. Leverage is a puzzle (i.e., a paradox) and always will be.
  d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease).
  e. None of the above.

Question 2

Automatic stabilizers have the effect of
 a. Increasing aggregate demand when the nation is below full employment.
  b. Restraining the decline in demand but not stimulating any increase in aggregate demand that would move the nation back toward equilibrium.
  c. Causing government spending to rise and taxes to rise as a nation moves into a recession.
  d. Destabilizing a nation, once you consider the active deficits or surpluses they cause.



Anna

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

.D

Answer to Question 2

.B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Did you know?

Patients should never assume they are being given the appropriate drugs. They should make sure they know which drugs are being prescribed, and always double-check that the drugs received match the prescription.

For a complete list of videos, visit our video library