Questions and Answers
What do we call it when people borrow more money and appear more creditworthy?
Bubble
What happens when debt repayments start growing faster than incomes?
Forced to cut back on spending
How do rising incomes and asset values impact borrowers' creditworthiness?
Improve creditworthiness
What is the outcome when debt burdens slowly increase over decades?
Signup and view all the answers
Why do lenders extend credit more freely despite people becoming more indebted?
Signup and view all the answers
What effect does borrowing huge amounts to buy assets as investments have on asset prices?
Signup and view all the answers
Why does borrowing decrease during a deleveraging period?
Signup and view all the answers
What happens to asset prices during a deleveraging?
Signup and view all the answers
Why is lowering interest rates ineffective during a deleveraging compared to a recession?
Signup and view all the answers
What is the primary reason for the difference between a recession and a deleveraging?
Signup and view all the answers
What contributes to the vicious cycle during a deleveraging period?
Signup and view all the answers
How do borrowers react when they feel crippled by debt during a deleveraging?
Signup and view all the answers
