Question

When a collateral shock occurs during a recession, the recession is: lessened as it leads to more loans and fewer firm failures. lessened as it triggers more unemployment and more time bunching. amplified as it triggers reduced unemployment and less time bunching. amplified as it leads to fewer loans and more firm failures.

Answer 1

Final answer:

When a collateral shock occurs during a recession, its impact on the recession can either lessen or amplify its effects. If the shock leads to more loans and fewer firm failures, the recession is lessened. Conversely, if the shock triggers