Long Recessions Often Follow Banking Crises Because

question 157

Multiple Choice

Long recessions often follow banking crises because:

• A)banking crises may cause a surplus of credit, so that interest rates fall to levels so low that investors earn very little in interest income.
• B)the vicious cycle of deleveraging that follows leads to overpriced assets.
• C)consumer and investment spending increase too rapidly, causing high rates of inflation.
• D)monetary policy is not very effective because banks hold on to excess reserves and are unwilling to lend them out.

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Definitions:

External Environment

Factors outside an organization that can impact its operation, including economic, technological, legal, and cultural elements.

Weak Cultures

Refers to organizational cultures that have loosely defined values and norms, resulting in less uniformity in employee behavior and potentially affecting consistency and performance.

Adaptive Culture

An organizational culture that is flexible, responsive, and able to change in alignment with external conditions or demands.

Organizational Culture

embodies the shared beliefs, values, norms, and practices that guide the behavior of people within an organization, shaping its social and psychological environment.