In 2008, Testifying Before Congress, Alan Greenspan, the Former Head

question 55

Multiple Choice

In 2008, testifying before Congress, Alan Greenspan, the former head of the Federal Reserve Bank:

• A) argued that regulation would damage banks, Wall Street, and the mortgage market.
• B) admitted that there had been a "flaw" in his long-held conviction that free markets would produce the best results.
• C) argued that the federal government should allow unregulated economic competition.
• D) argued that banks and investment firms should regulate themselves.

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Definitions:

Money Creation

The process by which the money supply of a country, or of an economic or monetary region, is increased.

Depository Institutions

Financial institutions that accept deposits from individuals and provide loans, such as banks and credit unions.

Loans

Sums of money borrowed that are expected to be paid back with interest by the borrower over a specified period of time.

Discount Rate

The interest rate charged by central banks on loans they give to commercial banks and other financial institutions.