In an uncontrolled or unregulated system, commercial bank lending will tend to intensify the business cycle.

Question

Quizplus · Accepted Answer

In an uncontrolled or unregulated system, commercial banks have more freedom to lend and this can result in an increase in credit availability and an expansion of the economy. However, this can also lead to a buildup of debt and speculative investments, which can exacerbate economic downturns during a recession. Therefore, unregulated commercial bank lending tends to intensify the business cycle.

In an Uncontrolled or Unregulated System, Commercial Bank Lending Will