As debt Blank______, bankruptcy costs Blank______.Multiple select question.increases; increasedecreases; increasedeceases; decreaseincreases; decrease

To solve the multiple-choice question regarding the relationship between debt and bankruptcy costs, let's analyze the options provided.

Understanding the Concepts

1. Debt: The amount of money borrowed by an individual or entity.
2. Bankruptcy Costs: Expenses incurred during the bankruptcy process, which can include legal fees, loss of assets, and administrative costs.

Analyzing the Options

• Increases; Increased: This suggests that as debt increases, bankruptcy costs also increase, which generally aligns with economic principles because higher debt can lead to more severe financial distress.
• Decreases; Increased: This combination does not make logical sense; if debt decreases, bankruptcy costs shouldn't increase.
• Increases; Decreases: This is counterintuitive; more debt typically increases bankruptcy costs.
• Decreases; Decrease: This combination suggests that with lower debt, bankruptcy costs also go down, which is reasonable.

Conclusion

The most plausible answers that reflect economic theory are:

1. Increases; Increased: Acknowledges that higher debt levels generally lead to increased risk of bankruptcy and associated costs.
2. Decreases; Decrease: Conveys that lower debt levels typically result in fewer bankruptcy costs.

Final Answer

Therefore, the correct selections are:

• Increases; Increased
• Decreases; Decrease