PrepTest 30, Section 2, Question 15
During the recent economic downturn, banks contributed to the decline by loaning less money. Prior to the downturn, regulatory standards for loanmaking by banks were tightened. Clearly, therefore, banks will lend more money if those standards are relaxed.
During the recent economic downturn, banks contributed to the decline by loaning less money. Prior to the downturn, regulatory standards for loanmaking by banks were tightened. Clearly, therefore, banks will lend more money if those standards are relaxed.
During the recent economic downturn, banks contributed to the decline by loaning less money. Prior to the downturn, regulatory standards for loanmaking by banks were tightened. Clearly, therefore, banks will lend more money if those standards are relaxed.
During the recent economic downturn, banks contributed to the decline by loaning less money. Prior to the downturn, regulatory standards for loanmaking by banks were tightened. Clearly, therefore, banks will lend more money if those standards are relaxed.
The argument assumes that
the downturn did not cause a significant decrease in the total amount of money on deposit with banks which is the source of funds for banks to lend
the imposition of the tighter regulatory standards was not a cause of the economic downturn
the reason for tightening the regulatory standards was not arbitrary
no economic downturn is accompanied by a significant decrease in the amount of money loaned out by banks to individual borrowers and to businesses
no relaxation of standards for loanmaking by banks would compensate for the effects of the downturn
Explanations
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