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:

Contract Rate

The agreed-upon rate specified in a contract for services or lending/borrowing, which could refer to interest rates or payment amounts for contractual services.

Bond

A debt security under which the issuer owes the holder a debt and is obliged to pay interest and/or to repay the principal at a later date.

Risk Level

The degree of uncertainty and/or potential financial loss inherent in an investment decision or policy.

Operating Leases

A lease agreement allowing a company to use an asset without ownership, typically with shorter terms, where the lessor bears the risk of obsolescence.