Following the U

question 134

Multiple Choice

Following the U.S. financial crisis in 2008, some observers assert that the policies of Fed Chairman Greenspan contributed to the crisis. Which of the following is a criticism of Greenspan's policies?
I. The very low interest rates used to fight the 2001 recession were maintained for too long, leading to the real estate bubble.
II. The Fed provided real estate developers with liquidity to encourage property development and offered tax breaks to first-time home buyers, which in turn fueled the real estate bubble.
III. The Fed did not promote appropriate regulations to deal with the new financial instruments that were created in the early 2000s.

• A) I and II only.
• B) I and III only.
• C) II and III only.
• D) I, II, and III.

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Definitions:

Cash Dividends

Profits distributed to shareholders out of a company's earnings in the form of cash.

Large Capital Stocks

Shares issued by a company that represent significant equity ownership and investment in the company.

Cash Dividend

A payment made by a corporation out of its earnings to shareholders, usually in the form of cash.

Shares Outstanding

The total number of a company's shares that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.