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.

Question

Quizplus · Accepted Answer

All of the above lessons have been learned from the recent global financial crisis. Developments in the financial sector, such as the proliferation of complex financial instruments and lax regulations, were major factors contributing to the crisis. The zero lower bound on interest rates made it difficult for central banks to stimulate the economy, and the cost of cleaning up after the crisis was immense, with many countries going into significant debt to bail out failing institutions. Finally, the crisis demonstrated that simply maintaining price and output stability is not sufficient to ensure financial stability.

Lessons That Economists and Policy Makers Have Learned from the Recent