Empirical Evidence Points to the Fact That Financial Crises

question 57

Multiple Choice

Empirical evidence points to the fact that financial crises:

• A) are newsworthy but have no impact on economic growth.
• B) have a negative impact on economic growth only for the year of the crisis.
• C) have a negative impact on economic growth for years.
• D) can have a positive impact on economic growth as weak borrowers are weeded out.

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Definitions:

Autonomous Consumption

The level of spending on goods and services that occurs even when income is zero, representing non-discretionary, baseline consumption.

Disposable Income

The financial stipend available to households for spending and saving endeavors after income taxes are considered.

Autonomous Consumption

The level of consumption expenditure that occurs when income levels are zero, reflecting the basic level of consumption that does not depend on current income.

APS

An acronym for Average Propensity to Save, which is the ratio of savings to the total net disposable income.