1- Lehman Brothers collapsed when
a-it started accepting deposits.
b-it ran out of long-term investment prospects.
c-it became subject to new restrictive governmental regulations.
d-it was no longer able to convince creditors that it was a safe place for parking short-term funds.
2- What term is applied to situations in which the failure of one financial institution increases the odds that another will fail?
a-Fire sale
b-Asset bubble
c-Financial contagion
d-Shadow banking
3- Inspite of enacting a fiscal and monetary stimulus, the United States is experiencing a slow recovering from the recession. As the Reinhart-Rogoff study shows, this is because:
a-economies experiencing a severe banking crisis tend to recover from any adverse effects within a year.
b-economies experiencing a severe banking crisis tend to endure a slow and prolonged recovery.
c-the unemployment rate remains stable following a banking crisis.
d-the unemployment rate decreases following a banking crisis.
4- Consumers and businesses with debt overhang are likely to:
a-increase their borrowing and decrease their spending.
b-increase their borrowing and increase their spending.
c-decrease their borrowing and decrease their spending.
d-decrease their borrowing and increase their spending.
5- Financial problems began in Greece when:
a-the Greek government revealed that it had understated the size of its budget deficits and debt.
b-the European Union forced Greece to give up its membership.
c-Greece adopted the euro.
d-the United Nations imposed trade sanctions on Greece.