Lessons That Economists and Policy Makers Have Learned from the Recent

question 75

Multiple Choice

Lessons that economists and policy makers have learned from the recent global financial crisis include

• A)Developments in the financial sector have a far greater impact on economic activity than was earlier realized.
• B)The zero lower bound on interest rates can be a serious problem.
• C)The cost of cleaning up after a financial crisis is very high.
• D)Price and output stability do not ensure financial stability.
• E)All of the above.

---

Definitions:

Expected Future Cash Flows

The projected amount of money a company expects to receive and pay out over future periods.

Risk

The exposure to potential financial loss or gain, often measured by the variability of returns.

Limited Liability Protection

A legal structure that shields a company's owners from being personally responsible for the company's debts or liabilities.

Corporate Form

A legal business structure recognized in many jurisdictions allowing the company to operate as a separate legal entity apart from its owners, providing limited liability and ease of ownership transfer.