Recall the Application About How the 2008 Financial Crisis Led

question 57

Multiple Choice

Recall the Application about how the 2008 financial crisis led to problems for some countries in the
Euro-zone to answer the following question(s) . When the euro was launched, countries with typically
weaker currencies or fiscal discipline benefitted from the discipline of one currency and a strong, single
central bank, the European Central Bank. The stability created by the euro with the strong influence of
Germany–recognized for its monetary and fiscal prudence–benefitted the traditionally weaker countries.
The financial crisis of 2008 exposed the downside to a single currency to a collection of countries whose
economies and political cultures differ sharply.
-According to this Application, Greece faced a major financial crisis in 2010 as its budgetary imbalance became quite severe. Since Greece is a member of the Euro-zone, it could no longer _______ as a potential solution to its financial problems.

• A)depreciate its currency
• B)cut spending
• C)raise taxes
• D)reduce wages and prices

---

Definitions:

Treasury Stock

Refers to shares that were once part of the outstanding shares but were bought back by the company and are now held in the company's treasury.

Par Value

A nominal value assigned to a share of stock by the company's corporate charter, unrelated to the market value.

Stated Value

A fixed dollar amount assigned to each share of no-par stock, designated by the board of directors of a company.

Treasury Stock

Shares that were once a part of the outstanding shares but were bought back by the company and are now held in the company's treasury.